Reg Martin, SOBE receiver

YOUNGSTOWN — The Public Utilities Commission of Ohio has asked a judge to remove Reg Martin, the controversial receiver for the beleaguered SOBE Thermal Energy Systems LLC that has failed to provide consistent steam heat to most of downtown Youngstown.

The unopposed motion filed late Wednesday by Julian Johnson, an assistant attorney general representing the PUCO, requested Mahoning County Common Pleas Court Judge Anthony Donofrio “remove and replace Reg Martin in his capacity as receiver appointed” Sept. 26 to manage SOBE and replace him with John C. Collins, an Akron attorney originally from Youngstown.

Donofrio is expected to approve the request.

Johnson’s filing states Collins “has extensive experience in receivership matters.”

Collins said Thursday it would be premature to comment as he hasn’t been appointed SOBE’s receiver yet.

Facing criticism and calls for his ouster by customers over SOBE’s failures to provide steam heat, particularly during recent subzero temperatures, Martin also was accused of downplaying the problems.

In Johnson’s filing, he wrote Martin, who lives in the Columbus area and infrequently came to Youngstown, “agreed to resign and be replaced with a receiver who resides more locally and can be present on site more frequently. It is undisputed SOBE continues to be in imminent danger of insolvency and that a receiver should be appointed to manage SOBE’s affairs.”

Brittany Waugaman, a PUCO spokeswoman, declined comment Thursday except to say, “The motion speaks for itself.”

Barb Ewing, CEO of the Youngstown Business Incubator, who called for Martin’s removal two weeks ago, said Thursday that getting rid of him as receiver “was a necessary decision. We have felt for a long time that he should leave. He has not been in Youngstown since our Dec. 17 meeting. Having someone in better proximity will be an improvement.”

Ryan Kelly, a co-owner of the Ohio One building, said Martin needed to go, but wants to make sure “we don’t take steps back with this. It’s a change that was definitely needed. The urgency (from Martin) wasn’t there, and that is absolutely necessary.”

SOBE’s boilers have repeatedly failed to provide proper heat and hot water for the 28 buildings in downtown Youngstown that are the company’s customers. That forced a number of them to shut down.

Several buildings have been without heat since last weekend with it only returning Thursday after the failure of two SOBE boilers, including an 800-horsepower one that arrived Feb. 1.

“It’s been tough,” Kelly said about SOBE’s inability to provide heat.

The latest failure came only days after SOBE couldn’t provide heat from Jan. 27 to Feb. 2, and Feb. 3 in some buildings, during days when the temperature was well below zero. Even after steam heat started flowing, some businesses couldn’t get it because of broken pipes.

CITY REACTION

The city, through spokesman Andy Resnick, said: “We applaud the long overdue action to appoint a new receiver at SOBE and look forward to working together to ensure SOBE finally delivers on its responsibilities. This is the direct result of our community coming together to raise our collective voices and demand action.”

Martin was appointed SOBE receiver Sept. 26 by Donofrio at the request of the PUCO as the company was about to go out of business and walked away from its responsibility to service most of downtown.

SOBE had its 800-horsepower boiler repossessed Sept. 30 over nonpayment. The repossession would have made the insolvent company unable to provide utilities.

Martin was able to rent a 650-horsepower boiler that was hooked up about 10 days after the repossession.

Thanks to $750,000 Martin received for SOBE from Enbridge Gas Ohio’s settlement of the 2024 Realty Tower gas explosion investigation by the PUCO, he rented a 200-horsepower boiler. But the two boilers couldn’t provide enough heat for customers starting Jan. 27 and lasting for a week.

Martin used the Enbridge settlement money to rent an 800-horsepower boiler, but that and the 650-horsepower boiler failed over the weekend.

While this was occurring, Kenneth R. Goldberg, Martin’s court-appointed attorney, filed a Jan. 29 report that the lack of heat issue was “caused by the failure of the customers to maintain the pressure relief valves and / or the customer use of bypass lines that due to their smaller size provide decreased pressure and flow.”

Several customers strongly disputed that claim, including the city of Youngstown, which is a SOBE customer.

Arguing Martin “failed to provide necessary and adequate steam service” to downtown Youngstown and “inexplicably” blamed its customers for the problems, city lawyers requested permission to intervene in the utility’s court case.

The city law department filed the motion to intervene Feb. 2. But it took a week for the county clerk of courts to formally accept the request as it struggled to figure out how to include the city as an intervening party.

The city’s motion states it should be allowed to intervene because SOBE, through Martin, has been unable to provide steam service as ordered by the court; the city “has direct, substantial and legally protectable interests that directly related to the receivership, including the protection of public health within city limits;” and “disposition of this action without the city’s direct participation will impair the city’s ability to protect these interests.”

PAYMENTS

Martin was paid $44,803.85 to serve as court receiver between Sept. 26 and Nov. 28, according to court records.

Once Collins is appointed receiver, the attorney will have to decide whether to retain Goldberg as SOBE’s legal counsel.

Goldberg received $21,900 between Sept. 29 and Nov. 24 to serve as SOBE’s legal counsel.

There hasn’t been a request filed by Goldberg for additional payments to himself or Martin as of Thursday. The last request was filed Dec. 11 by Goldberg and approved Jan. 5 by Donofrio.

State Rep. Lauren McNally, D-Youngstown, said: “I am disgusted by the way we have been treated in this crisis. The customers of SOBE have gone without reliable heat since September. Over the past six months, they have endured mismanagement, threats, loss of revenue, stonewalling and a winter with 48 inches of snow and multiple below zero-degree days.”

While Martin lasted less than five months at SOBE, he served as receiver from 2017 to 2019 when the downtown utility, then operated by Youngstown Thermal LLC, was about to go out of business.

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.

Martin 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.