YOUNGSTOWN, Ohio – The receiver now managing the affairs of troubled district utility SOBE Thermal Energy Systems LLC reports the company has approximately just $45,000 left in its bank account, and has asked a court to modify a payment plan to satisfy money owed to the previous receiver and his counsel.
According to papers filed with the Mahoning County Court of Common Pleas, receiver John Collins reported that SOBE owes former receiver Reg Martin and his attorney, Kenneth Goldberg, a balance of $55,570.31 from a total bill of $120,000.
However, the receiver, “after payment of the current Enbridge obligation, has only about $45,000 in its bank account and further payments are not expected until the first or second week of July,” the filing stated.
Collins’ attorney, Michael Moran, filed a motion on Monday asking the court to allow the company to pay Martin and Goldberg monthly installments of $9,261.72 beginning in July.
“The staff of the PUCO (Public Utilities Commission of Ohio) has reviewed the financial condition of the defendant, SOBE Thermal Energy Systems LLC, and, based upon its investigation, has concluded that the need to pay these costs have to be ameliorated in order to meet its current operating expenses,” according to court papers.
In his first report to the court in May, Collins said that the utility would run out of operating money by September or October unless the company could secure an emergency rate increase from the 23 customers it serves downtown, including City Hall.
On June 24, the PUCO approved emergency rates that could increase some SOBE customer charges by 163% during the peak heating season. The rates were necessary to cover operating expenses for the district steam heating operation, Collins had said.
According to previous filings, SOBE also owed Enbridge Gas a total of $1.9 million in arrearage. However, according to Collins’ first report to the court, there stood the potential for the parties to come to an agreement which would include Enbridge significantly reducing the amount it claimed and open the possibility of SOBE paying off the debt – expected to be more than $500,000 – over eighteen months.
It is not clear in the latest filing whether these obligations are fully paid or whether a settlement has been reached.
Receivership
The district heating company was placed into receivership in late September after the PUCO determined that SOBE could no longer deliver mandated services to its customers.
An 800-horsepower mobile boiler was disconnected and repossessed by its owners Sept. 30 after SOBE management failed to make payments on its lease obligations, leaving customers without heat or hot water.
The court appointed Reg Martin as SOBE’s receiver Sept. 26. A 650-horsepower boiler was secured to serve customers on the district heating line during the first week of October. Martin, however, acknowledged that the boiler’s capacity was inadequate to serve customers during the winter months. In December, a second 200-horsepower boiler was added, as the team worked to acquire another 800-horsepower boiler for the system.
Martin resigned as receiver in February, and the court appointed Collins, an Akron attorney, to replace him.
Martin’s removal came after customers – including City Hall – lost steam heat service to their buildings during one of the most severe winter cold blasts in recent memory. Temperatures plunged to 17 degrees below zero at points, as SOBE struggled to maintain adequate heating for downtown buildings and their tenants. A ruptured water line led to the complete shutdown of the company’s two mobile boilers. A third, an 800-horsepower boiler, was secured during the first week of February.
However, that boiler experienced a system failure Feb. 8, while the 650-horsepower unit at the site also shut down. That left a single boiler with just 200-horsepower capacity in operation, which was inadequate to supply steam heat to customers.