YOUNGSTOWN — As part of Enbridge Gas Ohio’s settlement of the Realty Tower explosion investigation by the Public Utilities Commission of Ohio, the gas utility company is giving $750,000 to the court-appointed receiver for the troubled SOBE Thermal Energy Systems LLC, which provides heat and hot water for much of downtown Youngstown.

Reg Martin, SOBE’s court-appointed receiver, will use the $750,000 to lease or purchase a much-needed backup boiler, according to a “notice of first report of receiver” filed with the Mahoning County Common Pleas Court by Kenneth R. Goldberg, Martin’s court-appointed attorney.

It is part of a Dec. 1 agreement Enbridge signed with the PUCO to conclude its investigation into the May 28, 2024, explosion of the former Realty Tower.

Enbridge agreed to a $1 million forfeiture for the natural gas leak that subsequently led to the explosion at the downtown building, killing one and injuring others. The 13-story building sustained significant damage in the explosion and was subsequently demolished.

A National Transportation Safety Board report in August determined bad documentation in 2015 by Dominion Energy, which became Enbridge, that falsely stated a natural-gas service line in the building’s basement was “dead” leading to a series of assumptions that resulted in the explosion.

The agreement with the PUCO provides a series of recommendations and allows Enbridge to pay the $1 million total forfeiture to two projects. It is giving $750,000 to SOBE for equipment with the remaining $250,000 “for the benefit of Youngstown’s residents and / or organizations affected by the incident. These funds will support the area impacted by the incident, including by reducing the likelihood of a loss or interruption in essential utility service that will negatively impact businesses or disrupt residents.”

The agreement calls the settlement “a reasonable compromise.”

It requires Enbridge to finalize a plan initiated during the NTSB investigation to review service lines that are considered abandoned and update all training materials on proper disconnection – which the utility says has been done. Enbridge must provide that information to the PUCO no later than 45 days after Dec. 1.

SOBE BOILER

The $750,000 will be used by Martin to rent a backup boiler for SOBE.

A rented 800-horsepower steam plant that provided utility services for SOBE’s 28 customers in downtown was repossessed Sept. 30 by court order because SOBE owes $383,214 in back payments to the steam plant’s owner, Wabash Power Equipment Co. of Wheeling, Illinois.

Martin was able to rent a smaller, 650-horsepower steam plant a few days after the old one was repossessed. But it took until Oct. 9 for it to operate, leaving customers without steam heat and hot water for 10 days.

That boiler from Power Mechanical Inc. of Newport News, Virginia, costs $19,750 a month to rent, Martin previously said.

At an Oct. 22 public meeting with SOBE customers, Martin said he could rent a 250-horsepower boiler, which would cost about $12,500 a month, to be used with the existing 650-horsepower boiler, but there were serious financial issues with the company he took over after its owners walked away.

Martin didn’t respond Wednesday to requests to comment.

In Goldberg’s court filing, he wrote: “The current leased boiler, a 650-hp boiler, is not a permanent solution for SOBE as the winter months require a larger boiler (800 hp) and the operation requires redundancy with a second boiler to avoid any service interruptions in case of mechanical issues.”

Goldberg wrote: “For the past several weeks, the receiver has been attempting to locate funding to meet the needs of the SOBE operation. The revenue of SOBE is insufficient to lease or purchase the necessary boilers to keep the public utility operational.”

Goldberg wrote that Martin contacted Enbridge, which sells natural gas to Youngstown, among other communities, for assistance and the company agreed to the $750,000 “monetary gift” for “the purpose of leasing or purchasing equipment necessary to ensure the continuity and reliability of essential heating and water service to commercial and residential buildings in downtown Youngstown.”

The proposed draft agreement, dated Tuesday, was included as an exhibit in the court filing.

Goldberg wrote: “The receiver has prepared this report to inform the court of the monetary gift and to provide assurances to (Enbridge) and to the court that the receiver will meet all fiduciary obligations with regard to the receipt and use of the monetary gift. The receiver declares that he will use the monetary gift only for the above stated purpose and as set forth in the gift agreement.”

The $750,000 will only be used to purchase or lease a second boiler and “will not be used to pay anyone or anything except as set forth in the stated purpose and gift agreement,” according to the court filing.

Goldberg wrote that Martin “is confident the monetary gift from (Enbridge) will put SOBE in a much stronger position to assure the Youngstown community has uninterrupted steam heat and hot water service during the winter months and beyond. However, even with this generous contribution, a permanent resolution to the economic and operational circumstances of SOBE will require significant additional capital and the receiver continues to seek additional funding options in order to find a permanent solution.”

SOBE ‘INSOLVENT’

Martin was appointed SOBE receiver Sept. 26 at the request of the Public Utilities Commission of Ohio as the company was about to go out of business.

Martin has said SOBE is “insolvent” with no assets besides its building and a few pieces of equipment while owing about $4 million to creditors.

A Mahoning County Common Pleas Court judge granted a $424,458 default judgment Nov. 26 against SOBE and in favor of Alcon Mechanical Piping Inc. of Niles for nonpayment of a bill.

SOBE never responded to the July 19 lawsuit. Alcon filed the complaint against SOBE for nonpayment for the January 2024 installation of piping at two downtown businesses that receive steam heat from SOBE on behalf of that company.

In an effort to avoid buying or leasing a second boiler, Martin had contacted Youngstown State University officials on Sept. 29, the day before the Wabash steam plant was repossessed, to see if SOBE could use the school’s boiler system through an old piping system. That effort failed Oct. 1 because leaks were found in the system, which hadn’t been used in more than nine years.

Martin said at the Oct. 22 meeting that the main problem could be fixed for about $25,000 because a contractor caused damage to the pipe at the Rayen Avenue and Elm Street intersection. The work would have taken about three days to finish, Martin had said, adding there could be other smaller leaks on the line, estimated to cost $5,000 to repair.

But John P. Hyden, YSU’s associate vice president for facility and support services, told The Vindicator on Oct. 28 that the effort to use the school’s backup boiler wasn’t going to work, saying: “There’s too many impediments because of the condition we find their lines in. It’s impossible to back-feed their system. The line is leaking so badly. Also, we can only run two boilers at a time and we’re going to use two in the winter. We don’t have the capacity to do it in the winter. It’s not going to happen.”

Martin also served as receiver from 2017 to 2019 when the downtown utility, then operated by Youngstown Thermal LLC, financially failed.

Martin was named to run Youngstown Thermal after the PUCO was informed by the company’s CEO that the business was financially failing, which could have caused an energy crisis downtown.

YSU used to be the largest customer for utility services from Youngstown Thermal until it left in 2016.

By 2017, Youngstown Thermal, which had numerous problems for years, could no longer ensure adequate service to its customers and was in danger of insolvency when the PUCO stepped in and appointed Martin.

When Martin was Youngstown Thermal’s receiver, the PUCO granted him permission for an additional surcharge on customers.

Martin was the receiver for two years before he worked out a deal with SOBE, based in Dublin, Ohio, to manage the facility in 2019. SOBE purchased the assets for $250,000 in November 2021.

But SOBE subsequently experienced a number of financial problems, attempted to get state approval for a controversial effort to convert rubber tire chips into synthetic gas, which gutted its previous operations, and could no longer effectively provide utility services to its customers.

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.