YOUNGSTOWN, Ohio – The Public Utilities Commission of Ohio has determined that SOBE Thermal Energy Systems LLC can’t provide adequate utility services to its downtown customers and has directed the Ohio attorney general to appoint a receiver to operate the troubled district heating and cooling company.
An order summarizing the agency’s findings and directive to the Ohio attorney general was approved Thursday morning during a meeting of the PUCO Board of Commissioners. The measure was approved unanimously without further discussion.
The PUCO found that SOBE “cannot ensure adequate service to its customers as required by Ohio Revised Code,” and that “given the imminent danger of insolvency, further directs the Attorney General to seek the appointment of a receiver and pursue any other appropriate civil remedy.”
A receiver would then facilitate the collection of accounts receivable, the creation of accurate accounting records, and the establishment of new rates for service, “all of which are necessary for the continuation of utility service to SOBE’s customers.”.
On Sept. 12, the PUCO staff requested an inquiry to investigate SOBE’s ability to provide utility services to its customers, as mandated by Ohio law.
SOBE provides steam heat, cooling and hot water services to 27 buildings and approximately 90 residential units in the central business district.
The company assumed the assets of Youngstown Thermal in 2019 from receivership and planned to use recycled tire chips to produce synthetic gas as a source to fuel its steam heating operation on North Avenue.
In the meantime, SOBE, based in Dublin, Ohio, agreed in 2019 to lease a mobile steam unit from Wabash Power Equipment Co. so it could serve customers while the plant converted its systems to synthetic gas. However, SOBE failed to make rental payments under the lease agreement, court documents say.
An Illinois federal court in January awarded Chicago area-based Wabash a default judgment totaling $383,214 against SOBE for breach of contract. Wabash then filed a motion in Mahoning County in May requesting that the court issue an order allowing repossession of the equipment. According to court papers, on Aug. 21 Mahoning Common Pleas Judge Anthony Donofrio issued a default judgment in favor of Wabash, allowing it to take immediate possession of the mobile unit.
The city earlier this week announced it had reached an agreement with Wabash that postpones repossession of the mobile unit Sept. 30. This allows SOBE to temporarily continue providing heating and cooling services to downtown customers.
“We have reached an agreement with Wabash to keep the trailer on site and operational through Sept. 30,” a spokesman for the city said Tuesday. “In the meantime, we continue to work with potential partners to find a long-term solution as quickly as possible.” The city has also agreed to pay Wabash $20,000 to continue service, court papers say.
Last week, the city filed a motion in Mahoning County Common Pleas Court requesting that the court delay Wabash from repossessing equipment that SOBE Thermal was using to supply customers with steam heat. A similar request to intervene was filed by the PUCO, but was denied by the court.
“The city does not oppose Wabash’s ultimate effort to be made whole,” the city’s motion stated. “Repossession of the mobile steam unit at this time, however, creates an untenable circumstance for residents and businesses in downtown Youngstown.”
In its order Thursday, the PUCO declared it was “committed to taking all appropriate steps to maintain reliable utility service to SOBE’s customers. Moreover, the exigent circumstances of this situation, where the seizure of SOBE’s equipment is impending, require that the commission act expeditiously.”