City, Youngstown Thermal Reach Settlement
YOUNGSTOWN, Ohio – A settlement agreement between the city and Youngstown Thermal LLC will help pave the way for the district heating and cooling company to move forward with its plans to stabilize its business and return the utility to profitability.
“These issues, plus getting costs under control, puts us on a path to use our net cash to cover our debts,” said Reg Martin, who was appointed as receiver last summer to handle Youngstown Thermal’s assets.
“When I started, we were hugely underwater,” he said. “We’ll at least be at break-even.”
Martin said the company’s fortunes have improved to a point where it has now requested the Public Utilities Commission of Ohio suspend the emergency surcharges that were approved three months ago.
While those surcharges were onerous to its customers, Martin said they were necessary to maintain the flow of needed services to all of Youngstown Thermal’s business clients downtown.
“For people to stay in and support the firm was important,” Martin said. “We’re working for the best interests of the city. There’s been no downturn in production, and we’re going forward.”
Youngstown Thermal filed a complaint earlier this year alleging the city owed it $141,570 for steam services to City Hall because of a broken meter.
According to the agreement, the city would owe Youngstown Thermal $110,000. That amount would be covered through the city forgiving post-receivership invoices totaling $63,005.46 that the city billed Youngstown Thermal for water and sewer services, and another $49,994.54 in water bill credits. Credits would be applied to any post-receivership outstanding balances and then to any future water billings.
“I think it’s a fair resolution,” said Mayor John McNally. “The law department has spent some time researching it, and they’re comfortable with it.”
City Council will hear enabling legislation Wednesday that would allow the Board of Control to approve the settlement agreement.
Youngstown Thermal’s former CEO, Carl Avers, informed the Public Utilities Commission of Ohio, or PUCO, last summer that the utility was in financial trouble and could no longer cover its debt obligations, which included payroll and utility bills.
As such, Youngstown Thermal faced disconnection of its electric, gas and water services for nonpayment, threatening service to about 40 customers downtown.
In August, Mahoning County Court of Common Pleas Judge R. Scott Kirchbaum appointed Martin as Youngstown Thermal’s receiver. Meantime, PUCO approved temporary surcharges to customers downtown in order to raise needed cash for the utility to continue in business.
“The surcharges put customers in a difficult position,” Martin noted. “But there was no alternative. We did it for three months and have suspended it.”
Martin said the company could now concentrate on building cash flow and paying down its outstanding pre-receivership debt, which he pegged at about $1.8 million. “We have to make sure customers are taken care of.”
The receiver added that Youngstown Thermal is engaged in discussions with several parties about a potential sale, but no deals are imminent.
“When I took this on, I said I wasn’t going to Band-Aid this,” Martin said. “We have to make this work, and we’re pleased with our relationship with the city.”
Copyright 2024 The Business Journal, Youngstown, Ohio.