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Receiver: Youngstown Thermal Sale a ‘Long-Term Solution’ for the City

YOUNGSTOWN, Ohio — The court-appointed receiver charged with overseeing the assets of Youngstown Thermal Heating Cooling said Monday that the sale of the district heating utility provides a long-term solution to a difficult situation.

“You can’t just put a Band-Aid on this,” said Reg Martin, who assumed control over Youngstown Thermal in August 2017. “You need something that is in the long run what is best for the customers.”

On Friday, attorneys representing Martin and Youngstown Thermal filed papers in Mahoning Common Pleas Court requesting that Judge R. Scott Krichbaum approve a purchase agreement between the company and SOBE Energy Solutions of Dublin, Ohio.

The agreement calls for the sale of plant at 205 North Ave., equipment and infrastructure for $250,000.

“They have a good history and knowledge of the industry behind them,” Martin said.

“The firm has had boots on the ground speaking with customers,” Martin said. The company, he said, plans to set up a co-generational plant that would provide steam heat to customers while making improvements that would reduce the cost of producing and delivering the service.

“In the long run, it will mean very attractive rates for customers that would stabilize over the next several years,” Martin said.

Initially, Martin said he would have preferred that the city assume ownership of the steam utility. However, Mayor Jamael Tito Brown and other city officials opposed the idea.

Martin projects that the improvements would be made over a two-year period of time after SOBE takes control of the operation. In the meantime, he’s confident that the customer base will grow. Youngstown Thermal supplies steam heat to more than 35 customers in downtown Youngstown.

These customers include the Youngstown YMCA, Ohio One Corp., and four city buildings, including City Hall.

It also supplies chiller services to three customers, including Home Savings Bank and the Youngstown Business Incubator.

“I know this will be a good, long-term solution for the city,” Martin said.

The Common Pleas Court must first approve the sale agreement, while the sale is also contingent on approval by the Public Utilities Commission of Ohio. “I believe SOBE is working with the PUCO already,” Martin said.

Steve Hubbard, SOBE CEO, said in an email that the company was awaiting a ruling by the court and the PUCO before making any statements to the press.

According to its website, SOBE Energy uses waste-to-fuel energy conversion technology that produces a clean, synthetic fuel gas that can be used directly in burners for heating, or in gas turbines for electrical generation. Youngstown Thermal uses fuel oil that is derived from wood waste, which has reduced fuel costs at the plant by about $1 million a year.

In September 2018, SOBE sent a non-binding letter of intent to Youngstown Thermal considering the purchase of the steam plant, according to a previous receiver’s report.

Youngstown Thermal began to experience financial troubles in 2017 after its largest customer, Youngstown State University, opted to build its own boiler units and left the system. The company was forced into receivership when it was unable to pay its bills.

Under receivership, Youngstown Thermal was able to erase a deficit of $1.8 million and realize a small profit of $2,500 during 2018, according to reports filed with the court. This was accomplished through cutting costs, reducing the workforce, instating an emergency surcharge on customers and establishing a new rate structure.

Published by The Business Journal, Youngstown, Ohio.