YOUNGSTOWN — With a rented steam plant used by SOBE Thermal Energy Systems LLC to provide utilities to 27 downtown buildings in danger of being repossessed, Public Utilities Commission of Ohio staff asked for an investigation into SOBE’s “ability to continue to provide adequate services to its customers.”

With considerable uncertainty surrounding SOBE’s ability to provide heating, cooling and hot water services to its customers, the PUCO is expected to discuss the request from its staff to investigate at its Thursday meeting.

Wabash Power Equipment Co., which is owed $383,214 by SOBE for nonpayment of the rented mobile steam plant, could repossess the equipment as soon as Tuesday, according to court records.

In a Friday letter to PUCO Chairwoman Jenifer French, Donald Leming, director of the agency’s service monitoring and enforcement department, requested the opening of a case docket to investigate SOBE.

Mahoning County Common Pleas Court Judge Anthony Donofrio granted a default motion on Aug. 21 against SOBE filed by Wabash because the former breached a lease agreement for a steam plant at its Youngstown facility, 205 North Ave., SOBE signed a lease in November 2019 to use Wabash’s steam plant at $19,500 a month.

A federal judge ruled Jan. 29 in favor of Wabash’s motion for default judgment of $383,214 when SOBE never responded to the case. Wabash, based in Wheeling, Illinois, then filed May 23 in Mahoning common pleas to repossess and remove the equipment after SOBE refused many demands for the property, according to court documents.

SOBE still has Wasbash’s equipment though an Aug. 29 court filing by the company stated it could repossess the plant as soon as Tuesday.

That would leave SOBE’s 27 downtown buildings, including two buildings with 90 residents, without heating and cooling services and hot water.

Leming wrote Friday: “SOBE relies on the equipment to provide heating and cooling services to these customers,” and “without the equipment, SOBE will be unable to provide utility services to any of these customers. Further, as of the filing of this letter, SOBE has not obtained alternate equipment to service customers after Wabash takes possession of the equipment.”

He added: “Staff is concerned that SOBE’s duty to furnish adequate service to its customers pursuant to (a state law) may be compromised.”

PUCO REQUEST

The PUCO on Aug. 29 asked Donofrio to reopen the case docket and for a brief stay of execution of judgment — about 30 days — because SOBE would shut off service to its customers without Wabash’s steam plant.

In that Aug. 29 filing, the PUCO wrote: “SOBE represented to the PUCO that it has made its previous two monthly payments to Wabash and it will make its next monthly payment to Wabash by the end of the month. Further, SOBE’s customers have not been notified of the risk of losing heating and cooling. The continuation of service for SOBE’s customers is particularly important as the seasons change and temperatures begin to fall. At a minimum, customers should be provided with notice and an opportunity to take action to ensure their safety if they are disconnected from heating and not able to have hot water.”

Also on Aug. 29, Wabash filed a response saying the PUCO’s request was moot because the time of the stay “has essentially been voluntarily provided already.” That Wabash response states it has voluntarily deferred recovery of its equipment until at least this upcoming Tuesday.

Donofrio rejected the PUCO’s request Monday.

“This case is closed and the court no longer has jurisdiction over the matter absent a successful motion pursuant to” a civil court rule, Donofrio wrote in Monday’s judgment entry.

The city filed a motion Monday to intervene in the Wabash-SOBE case “to ensure the health, safety and welfare of residents and businesses in downtown Youngstown.”

Despite Donofrio’s decision to reject the PUCO’s requests to get involved in the case, Magistrate Nicole Butler wrote in a Thursday order that the commission’s motion for leave to intervene and the city’s motion to intervene would be discussed during a Friday telephone conference with attorneys.

That telephone conference occurred, but there are no details about what happened.

The city’s Monday motion, filed by Jason Small, a senior assistant law director, states: “At present, upon information and belief, the mobile steam plant is the sole means by which SOBE provides heating and cooling to its customers in downtown Youngstown; to the city’s knowledge, no other equipment owned and operated by SOBE functions to do so.”

Small wrote: “Without an alternative production method in place, if Wabash repossesses the mobile steam plant, SOBE’s residential and commercial customers will be without heat, cooling and hot water indefinitely. SOBE informed neither its customers nor the city of the circumstances of this case.”

The city requested a stay of the default judgment of at least 30 days.

Small wrote the PUCO “stated its willingness to ensure continuity of utility services,” and that the PUCO “be granted time to arrange alternative means of providing utility services so that the residents and businesses in downtown Youngstown need not go without.”

Small wrote the city doesn’t oppose Wabash’s “ultimate effort to be made whole. Repossession of the mobile steam unit at this time, however, creates an untenable circumstance for residents and businesses in Youngstown. Customers’ heating, cooling and hot water would be shut off with no warning and no timeline for restarting services.”

SOBE hasn’t responded to the Wabash repossession case in either federal court or Mahoning common pleas.

SYNTHETIC GAS ISSUE

Vorys, Sater, Seymour and Pease, a Columbus law firm that represented SOBE in an Ohio Environmental Review Appeals Commission case filed by the city of Youngstown against the company and the Ohio Environmental Protection Agency director, asked July 15 to withdraw from the case.

Law firms typically seek to leave cases in that manner when they’re not being paid by their clients.

The city opposes SOBE’s plans to convert rubber tire chips into synthetic gas at its Youngstown facility as well as the Ohio EPA granting a permit on Feb. 14, 2024, to permit SOBE to move ahead with that plan.

The city objects to the permit and filed an appeal March 15, 2024, stating the EPA’s decision to issue a final permit “is unreasonable and lacking a valid factual foundation, and / or unlawful and not in accordance with state law.” The city asked the commission to order the state EPA director to revoke the permit.

The Ohio EPA issued an “air permit to install and operate” to SOBE to shred tires that would be converted into gas at its Youngstown plant over numerous objections from city officials and residents.

City council on Nov. 20 approved a second one-year moratorium on the process SOBE plans to use at its plant. Council members say the process is dangerous, untested and harmful to the environment. They also said they don’t plan to ever lift the moratorium that was initially passed Dec. 20, 2023.

City officials repeatedly have said the project needs approval from Youngstown for a zoning change to move forward, and they oppose that.

Opponents of the project have said the synthetic gas is toxic and a highly explosive hazardous material and that air emissions would threaten public health.

At an Aug. 6 Environmental Appeals Commission status conference, SOBE was given until Aug. 20 to file a notice of new legal counsel and all the parties were ordered to file a joint proposed case management schedule by Sept. 3.

It’s the last entry on the docket for the case.

Also, Alcon Mechanical Piping Inc. of Niles on July 19 filed a complaint against SOBE in Mahoning County Common Pleas Court for nonpayment for the January 2024 installation of piping at two downtown businesses that receive steam heat from SOBE on behalf of that company.

The lawsuit contends on Sept. 20, 2024, that David Ferro, SOBE’s CEO, “delivered a check to plaintiff in the amount of $400,000 and was deliberately obtuse and evasive as to whether or not the check could be cashed.”

When the check was cashed Feb. 18, the lawsuit claims it was returned for insufficient funds.

Alcon sent a letter to SOBE on April 17 saying it would sue for “passing of bad checks,” and SOBE “has not responded to this demand in any meaningful respect,” according to the lawsuit.

Alcon is suing for $428,458, including compensatory damages.

HISTORY

Based in Dublin, Ohio, SOBE acquired the former Youngstown Thermal LLC and Youngstown Thermal Cooling LLC in November 2021 for $250,000. The company had managed the facility for two years prior.

Before taking over, Youngstown Thermal had numerous problems for years operating its cooling system – leaving the handful of downtown businesses that used it without air conditioning during the summer.

Youngstown Thermal was placed into receivership in 2017 after the Public Utilities Commission of Ohio was informed by the company’s former CEO that the business had financial struggles that could have caused an energy crisis downtown. Youngstown Thermal couldn’t ensure adequate service to its customers and was in danger of insolvency when the PUCO stepped in.

Youngstown Thermal is the oldest district heating and cooling system in the country, having begun operations in 1895. It was designed to generate and distribute steam to heat downtown businesses using coal as its main source of fuel.