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YOUNGSTOWN - SOBE Thermal Energy Systems LLC could disconnect four of its downtown Youngstown customers that haven't paid their bills in at least 60 days as soon as Oct. 13.
SOBE receiver John C. Collins and Michael Moran, his court-appointed attorney, told The Vindicator on Tuesday that the utility company doesn't want to shut off steam heat to the four buildings, but if payment isn't made, there is no other choice.
Moran said: "At the moment, we're trying to find out if they'll make the tariff payments. If not, we'll be disconnecting. We can't provide utility service without receiving payment. If they don't pay, it forces our other customers to pay more. Oct. 13 is the shut-off date if we don't receive payment. But that can change as things are fluid at SOBE."
Collins said: "Oct. 13 is the earliest disconnection date. They have to pay or they're disconnected."
The four customers who are at least 60 days delinquent with their bills and received shutoff notices area: West 34 Investors LLC, the owner of Wick Tower; Erie Terminal Place LLC, which owns Erie Terminal Place; 22 Market Street Ohio LLC, which is developing the former Mahoning National Bank building; and FNB Youngstown LLC, which owns the First National Bank Building, also known as Central Tower.
The four properties haven't paid their SOBE bills, which included a major rate increase as of June 30, in the past 60 days, with some being longer than that, Collins and Moran said.
The four were first sent disconnection notices Sept. 6 with the warning that they could be disconnected as soon as Sept. 26, though it was more likely to happen this week.
SOBE gave the four an extension to at least Oct. 13, but Collins and Moran said the disconnection will occur if payments aren't made.
Erie Terminal on Aug. 26 paid $8 - what it was billed for August, September and October 2025 - for its invoice while SOBE states it owes $25,734.97 for two months.
SOBE records show for the past 60 days, Wick owes $10,752.72, 22 Market owes $12,360.75 and FNB owes $7,947.86.
The PUCO on June 24 granted significant emergency rate increases for SOBE's 23 customers, which make up a majority of downtown Youngstown and include Wick Tower and Erie Terminal.
For 13 of the SOBE's 23 customers, the emergency rate increase for the non-heating season between May and October, was 93% with two at 92%, one at 91% and two at 36%. The five other customers are paying between 64% and 80% more.
Between November and April, the rate will increase by another 162% for 14 of SOBE's 23 customers. One will pay 163% more during those six months with two paying 85% more. The six others will pay increases between 123% and 159%.
Dominic Marchionda, whose companies own Wick and Erie, said he is willing to pay the increases, but his buildings were billed far more than 93%.
Marchionda said Erie Terminal paid an average monthly payment of $850.62 between Aug. 1, 2025 and July 31, 2026. With the 93% increase, that should go to $1,642.07 monthly, he said. Instead, Erie was charged $12,916.49 when the building didn't even use steam heat.
"The building has a meter so they should charge the correct rate," Marchionda said. "Instead, they're charging me for 12 months and I'm probably not going to be on the system for 12 months with this rate. I'm receptive to an amicable resolution."
Marchionda's two companies filed a motion to intervene Sept. 21 in a Mahoning County Common Pleas Court case - Public Utilities Commission of Ohio v. SOBE. That case was filed Sept. 19, 2025, to allow the PUCO to appoint Reg Martin as SOBE's receiver on Sept. 26, 2025, to avoid having the company go out of business and leave most of downtown without heat.
Collins replaced Martin on Feb. 17 at the request of the PUCO.
Collins and Moran said Marchionda's filing in common pleas court does nothing to help his buildings as the PUCO has exclusive jurisdiction over the emergency rate increases.
Moran filed a Sept. 29 response in common pleas court in which he didn't oppose the two businesses' request for limited intervention, but wrote "there is no apparent purpose to the proposed claims to be filed" in common pleas court as it should be handled by the PUCO.
The PUCO filed an objection Monday to the motion to intervene because "it has exclusive jurisdiction over issues related to public utility service, including disputes related to payment for service, the disconnection of service or the abandonment of public utility assets."
Collins said Tuesday: "I told Mr. Marchionda that if he had objections, which he does, we don't have the power to change that. You need to file objections with the PUCO. He hasn't done so."
Marchionda said he's waiting for a response from Judge Anthony Donofrio before proceeding, but recently contacted the PUCO.
Marchionda said: "If they want to shut me off, we'll deal with this in a legal filing. I don't know how this is going to end, but if they want a legal battle, we'll do that. The way they calculated these bills is absolutely incorrect. Give me a chance to be heard and I can make an educated decision. If they are correct - and I don't believe they are - I have no choice but to go off the system."
Marchionda said Wick Tower paid $5,572.80 monthly for the past 12 months except for a two-month period where tenants did not have consistent heat and that caused damage to pipes and resulted in the company putting tenants in the downtown hotel while the pipes were repaired.
Marchionda said: "SOBE has been mismanaged for years and (the) PUCO, the entity that is responsible for oversight, has failed to discharge its duties of oversight. This has created a situation that is unreasonable and unfair to customers and will put residential tenants potentially at risk in absence of a resolution."
Both Wick and Erie have 40 residential units.
Marchionda said: "The owners of Erie and Wick remain willing to pay their reasonable share. Furthermore, the ownership has requested clarification from the receiver as to the billing, but the receiver has indicated that they are unable to rectify or change the amount set by PUCO. The ownership has reached out to the PUCO and has expressed a willingness to work through the matter, but would like clarification as to how rates and increases were determined. A response is pending."
FINANCIAL WOES
The emergency rate increases were supposed to keep SOBE out of financial ruin, but that hasn't happened because of customers not paying the hikes.
Before the PUCO granted the emergency increases, SOBE was making $120,000 a month, which is far less than its expenses.
Collins said even with the increases, SOBE brought in $129,000 in September with $38,000 of it being back payments from customers for July and August.
"That's not enough to pay all the bills," Collins said. "The rate increase hasn't made an appreciable difference for us."
Asked how much longer SOBE can remain in business, Collins said, "I just don't know the answer to it. We don't have enough money."
SOBE came to a settlement in July with Enbridge Gas Co. for past due bills. The amount was negotiated down from $2,226,662.62 to $724,324.42 with the agreement calling for SOBE to pay $40,240.25 a month, starting in August, for 18 months as well as regular gas bills.
But SOBE doesn't have the money to pay Enbridge and is already two months late with the payment plan, Moran said.
"We've been maintaining current consumption payments," Moran said of Enbridge's regular monthly bill.
But Collins said: "That will become problematic in November, December and January when the cost doubles, triples or quadruples because of need and cost. We remain hopeful of a solution, but we're very concerned."
BOILERS
SOBE returned two rented boilers in late July-early August and kept an 800-horsepower boiler, the largest at its Youngstown location, which reduced that monthly cost from $58,000 to $28,400.
SOBE has less than $120,000 left from a $750,000 payment given to it by Enbridge as part of the gas company's $1 million settlement with the PUCO over the Realty Tower explosion investigation. SOBE uses that money to lease the boilers.
A second 800-horsepower boiler is on order and will be arriving and then installed likely sometime this month though Collins said SOBE hasn't been given an arrival date from Power Mechanical Inc., the Newport News, Virginia, company, that leases the boilers.
That second boiler will double the rental cost for SOBE to $56,800.
"We'll have three months of payments from the Enbridge gift money," Collins said. "After that, we can't pay" the boilers.
Collins and Moran said there was optimism as recently as last week that there would be state and/or federal funding to bail out the company.
But that optimism has faded, they said.
Collins said: "We are not hearing anything concrete from the state at all."
Moran added: "Crickets" in explaining what SOBE has heard from the state.
Collins said: "There's things that are supposedly in the works, but we're not hearing anything concrete from the state. We're all waiting to see if anything will come through from the state and we're struggling to continue operations."
There was supposedly going to be an item on the Oct. 19 meeting of the State Controlling Board to fund SOBE through the winter. As of Tuesday, nothing has been submitted to the Controlling Board regarding SOBE.
And time and money are running out, Collins and Moran said, which would leave a majority of downtown Youngstown buildings without heat as the colder temperatures quickly approach.
DETROIT THERMAL OUT
In a Sept. 2 report to common pleas court, Collins wrote that while Detroit Thermal hasn't submitted a written proposal, its general manager told him "the company is in discussions with all interested parties and may be submitting a proposal within the next month."
But Collins and Moran said Detroit Thermal has withdrawn its interest.
"Detroit Thermal is out as far as we know," Collins said.
"At least temporarily," Moran added.
Collins said that could change, but Detroit Thermal "withdrew their interest at this time. I was told if we heard from the state or Youngstown State that could change. They needed to see what the state was going to do and they were trying to come to an agreement with Youngstown State and they needed to talk to all of the customers. None of that happened."
It's unclear what Detroit Thermal wanted to discuss with YSU because the university has made it known that it won't sell its steam plant and won't put downtown Youngstown customers on its system because it's not a public utility.
Collins said the steam lines between SOBE and YSU - the latter used to be a customer of the utility company - "have significant problems that would involve a substantial capital improvement."