YOUNGSTOWN, Ohio – The receiver managing the affairs of SOBE Thermal Energy Systems LLC has notified a Mahoning County Common Pleas Court that unless additional funding is secured, the district steam-heating company could cease operations by September or October.
“It is the opinion of the receiver that unless monies are provided to the receivership estate to pay operator expenses, including boiler lease payments, at least until such time as a new buyer is found, public funding is awarded to the company, or another party to provide reconstruction of the steam plant, then SOBE Thermal will no longer be able to operate,” John C. Collins wrote in his first report to the court.
Collins said in his report that funds totaling $750,000 awarded to SOBE under a gift agreement with Enbridge Gas Co. would be exhausted by September or October. “After that time, the company will not be able to pay the lease payments for the boilers that are necessary to provide steam heat to the customers of downtown Youngstown out of operating income.”
According to the receiver’s report, the balance of the Enbridge gift fund stood at $312,172 as of May 6.
As such, SOBE has recently filed an emergency request with the Public Utilities Commission of Ohio to approve a rate increase for downtown customers.
Collins added in his report that one of the greatest challenges facing the business is that the steam plant and its older boilers were razed by SOBE’s previous owner, David Ferro. “What is absolutely required in order to give SOBE Thermal an opportunity to become a viable business entity is a complete reconstruction of the steam plant,” the report said.
A cost estimate of rebuilding the plant was completed in March, and a request for emergency funding to reconstruct the plant was submitted to Gov. Mike DeWine.
The amount was not included in the receiver’s report.
The district heating company was placed into receivership in late September after the PUCO determined that it 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.
Meanwhile, customers and officials pressed the PUCO to intervene and replace Martin as receiver, questioning his management of the company.
Martin resigned as receiver in February, and the court appointed Collins, an Akron attorney, to replace him.
Martin’s removal comes 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.
The debacle forced several organizations and businesses to temporarily close.