YOUNGSTOWN — The Public Utilities Commission of Ohio on Thursday ordered Attorney General Dave Yost to seek appointment of a receiver for SOBE Thermal Systems LLC of Youngstown because of concerns that SOBE will not be able to continue to deliver water, steam or air for heating and cooling to 27 downtown Youngstown businesses in the coming weeks.

“SOBE’s customers deserve to have peace of mind that their vital utility services remain uninterrupted,” PUCO Chair Jenifer French said in a statement after the decision was reached at a PUCO board meeting. “The PUCO is committed to taking all appropriate steps necessary to ensure reliable utility service for downtown Youngstown,” French stated.

A receiver is a neutral person, often a professional trustee, appointed by a court to manage a party’s legal interests in a court proceeding, according to the Cornell School of Law Legal Information Institute.

The PUCO said it was approving the “finding and order” because SOBE “cannot ensure adequate service to its customers as required by (Ohio law) and given the imminent danger of insolvency.”

The commission further stated that, due to SOBE’s failure to timely pay Wabash Power Equipment Company (money owed), there exists an order allowing repossession of a “containerized mobile steam plant,” which is necessary for SOBE to provide the water, steam and air.

The Ohio law the PUCO cited requires every public utility in Ohio to “furnish necessary and adequate service and facilities, and every public utility shall furnish and provide with respect to its business such instrumentalities and facilities as are adequate and in all respects just and reasonable.”

Among the places SOBE provides its services is the central business district of Youngstown, the finding and order states. As such, SOBE is a “heating and cooling company” as defined in Ohio law and a “public utility” under state law, “rendering (SOBE) subject to the (PUCO’s) jurisdiction,” the document states.

The PUCO recently became aware of numerous court cases involving SOBE. And on Sept. 12, PUCO staff filed a letter asking the PUCO to open an investigation following reports that equipment essential to SOBE’s operations was due to be repossessed for nonpayment.

The PUCO action followed a Mahoning County Common Pleas Court ruling Tuesday approving an agreement between the PUCO and Wabash Power Equipment Co. in which Wabash will allow its mobile steam production trailer to remain in place at SOBE Thermal Energy until Sept. 30. Wabash was set to repossess the mobile steam plant Tuesday until the court ruling.

A Youngstown spokesman said Tuesday that in the time left before the mobile steam plant is set to be repossessed, the city will “continue to work with potential partners to find a long-term solution as quickly as possible.” The statement said the city will provide more details “as we get a clearer picture” of the long-term solution. SOBE provides utilities to 27 downtown buildings and about 90 residential units, but that will be put in jeopardy if the mobile steam plant is repossessed.

The likelihood that the mobile steam plant will be repossessed increased after a federal judge ruled Jan. 29 in favor of Wabash’s motion for a default judgment of $383,214 when SOBE never responded to federal litigation Wabash filed May 23 in Mahoning County Common Pleas Court.

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

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 PUCO 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.