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PUCO OKs Surcharges for Youngstown Thermal Customers

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YOUNGSTOWN, Ohio – The Public Utilities Commission of Ohio on Wednesday approved emergency rate surcharges to customers of Youngstown Thermal LLC in an effort to rescue the troubled utility and prevent possible damage and disruption to downtown businesses.

In an order filed Aug. 2, the PUCO determined that “the evidence before us clearly and convincingly demonstrates the presence of extraordinary circumstances which constitute a genuine emergency situation.”

Youngstown Thermal is a district heating and cooling supplier to 45 customers downtown. In June, the company informed the PUCO that it was in financial distress, and a subsequent finding by the PUCO concluded the utility was unable to cover its debt obligations, payroll or its own utility suppliers.

Youngstown Thermal faced disconnection of electric, gas and water utility services because of nonpayment, which would have rendered it impossible to provide heating and cooling services.

Stated the order, “Youngstown Thermal is in imminent and continuing danger of breaching its statutory duty to furnish necessary and adequate service, potentially leaving the business district of downtown Youngstown without steam and chilled water service necessary for its day-to-day operations.”

The rate increases will be in effect for the July, August and September billing periods, and will vary according to customer, according to documents filed with the PUCO. The surcharges would be reassessed during the fall and winter months.

The surcharges for each month range from $100 to $12,582, depending on the customer, according to the PUCO staff recommendation. While the recommendation reported the new surcharges, it did not identify the names of the 45 customers affected by the emergency action or how much more they will pay.

“The commission understands that this is a tough situation for the customers of Youngstown Thermal,” PUCO Chairman Asim Z. Haque said in a statement. “With the work of the receiver, as well as Youngstown leadership, we will continue to make every effort to see Youngstown Thermal’s customers through to a more viable long-term solution.”

The PUCO also directed Youngstown Thermal to file final tariffs consistent with the order within 30 days.

“We’re expecting a rate increase and we’re still waiting to see the publication of the emergency rate structure,” said Mayor John McNally. Youngstown Thermal provides heat and chilled water services to five city buildings.

Among other downtown customers are the Youngstown Business Incubator and The Vindicator.

A PUCO staff recommendation filed July 31 determined that the surcharge was necessary to recover 120% of payroll and health care expenses that Youngstown Thermal was unable to meet.

Surcharge rates for customers were determined according to how much a customer uses during the peak demand month, based on 2016 usage. For heating customers, the peak demand month is January, and for cooling customers, peak demand was August.

Youngstown Thermal’s financial straits led the PUCO to ask the Ohio attorney general to request that Mahoning County Common Pleas Court appoint a receiver to handle the utility’s financial affairs.

On Tuesday, Mahoning County Common Pleas Judge R. Scott Krichbaum appointed Reg Martin, owner of Columbus-based Martin Management Services, as receiver in the Youngstown Thermal case.

The receiver is authorized to exert complete control of the company’s operations, according to Krichbaum’s order.

McNally said the best-case scenario is that the receiver will find a buyer for Youngstown Thermal that can then return the utility to profitability.

“There are one or two potential purchasers that I’ve heard about,” he said.

Youngstown Thermal’s president and CEO Carl Avers announced in June that the company’s assets are for sale. He has said one of the reasons for his company’s problems was that customers were not paying their bills.

Youngstown Thermal alleges that the city still owes the company about $141,000. The city says the utility has outstanding water bills it hasn’t paid.

“The water bills are in the ballpark of $42,000,” McNally said, noting the city may file a motion to intervene in the case to protect its interests.

The mayor said it’s important to give the receiver a chance to conduct the affairs of Youngstown Thermal and perhaps find a buyer.

“One of my concerns is that it appears that the rates aren’t enough to maintain the system,” McNally said. “So, at some time, there should be some level of sticker shock. I’m hoping the receiver finds a purchaser that can come in and help right the ship.”

Published by The Business Journal, Youngstown, Ohio.