Avers Responds to Stories about Youngstown Thermal
YOUNGSTOWN, Ohio – The CEO of Youngstown Thermal LLC, Carl E. Avers, offers “some perspective” on this week’s three-part series of reports on his company.
In a letter to the publisher of The Business Journal, Andrea Wood, who researched and wrote the reports, Avers says, “It is my vision that the community will come together as they did in 1979 to, not only to save the downtown steam system but make it prosper for the benefit of its current and future steam customers. “
Avers was referring to his Youngstown Energy Plan, detailed in one of the stories published this week:
Part One: Thermal Losing 60% of Revenue; CEO in Bankruptcy
Part Two: $5 Million Price Tag for Thermal’s Turnaround Plan
Part Three: YSU to Borrow $16M to Build Its Own Steam Plant
Avers’ letter enclosed documents that can be downloaded below.
Here is the full text of his letter:
Attached is a document that shows the information on the Baltimore, Boston, Philadelphia, Cleveland, Pittsburgh and San Francisco steam systems. This financial analysis shows the purchase price and the quick turn-a-round of these systems within one year.
In effect, we are at year one for Youngstown Thermal. We have a business plan going forward that will have similar positive and dramatic results as we did at all of these systems.
A second attachment is all of the financings that we have done as a group of engineers from 1980 through 2000, a span of 20 years. During that 20 year period we raised $173,590,000. All of these debts were retired with interest. All of these companies continue to be very successful and have been grown to serve more customers. A number of these systems included power generation which is what we envision for Youngstown Thermal’s future as well as district heating and district cooling.
We acquired the Cleveland system in 1987. Since that time, $35 million of investment was made into a district cooling system. We sold the Cleveland System to an electric utility. They, in turn, sold it to a private investor. Last week it was sold to an electric utility headquartered in Canada. They plan a similar but different go forward business plan to that which we envision for Youngstown.
Since our first acquisition in 1979 energy prices have increased dramatically and they will continue to increase dramatically. Today, it takes a community organization to structure a community business arrangement that will insulate the community from rapidly increasing energy costs.
To underscore and reinforce my confidence in structuring a new energy system for our greater Youngstown community I’ve included a copy of a recent article in Crain’s Detroit Business newspaper dated July 13, 2015. Customers in Michigan spent $253 million on energy improvement projects. That investment is returning $948 million per year to these customers on reduced energy costs. As you are aware, we have identified approximately $30 million of annual savings for the greater Youngstown downtown community. This group of energy users spend $70 million per year. Much of this expenditure is unnecessary in the marketplace. Part of our program will be one of the education to help building owners acquire the right mix of utility services at the appropriate price.
The first company roll up that we organized here in Youngstown beginning in 1979 was called Catalyst Thermal Energy Corp. I’ve attached an annual report of that company from 1987. That was the period that we acquired the systems in Philadelphia, Boston and Cleveland and closed on their respective purchases all within a 6 month period. All of these systems are enjoying good financial health and we are proud of having been responsible for acquiring these facilities form electric utilities and, after our investments and restructuring, set them on a path to a better serve their respective communities.
It is important to understand that our management team never bought the Akron steam system. The Akron Steam System is owned by the City of Akron. Akron Thermal added Akron University to the system as well as the Summa Health Hospital when we were brought in as “operators” of that system in 1994. I formed Akron Thermal as an operating company and operated Akron Steam under Akron Thermal from 1994 to 2004. I left Akron Thermal in early 2004. I was not the operator in 2007 when the company declared bankruptcy. Soon after I departed Akron as the operator in 2004 major customers left the system including the university and a hospital. While I managed that system we expanded the district cooling system to serve 12 additional buildings and that system continues to grow. In 1960 no cities had district cooling and today 67 cities have installed downtown chilled water systems. Generally, these were installed by electric, steam and gas utilities to address high electric bills on high priced peak load conditions.
I hope this puts some perspective on Youngstown Thermal. The Youngstown community sets at the brink of embracing the Youngstown Energy Plan or not. It is my vision that the community will come together as they did in 1979 to, not only to save the downtown steam system but make it prosper for the benefit of its current and future steam customers. Ohio Edison estimated the cost to place new boilers in all of the buildings downtown at $50 million. Continuation of the steam business while augmenting it with power generation is the obvious and better choice. Bringing $30 million of savings to the community as a companion project is the smart approach.
Carl E. Avers
Chairman & CEO
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