The Public Utilities Commission of Ohio will consider Wednesday a staff-recommended emergency rate hike of 145% for most SOBE Thermal Energy Systems LLC’s downtown Youngstown customers during the six months when steam heat is most used and 75% during the rest of the year.

A report filed Monday by Christopher Healey, PUCO’s Rates and Analysis Department’s chief of accounting and finances, recommended the rate increase to take effect as soon as July for the 23 buildings — a majority of downtown Youngstown — as the utility company is on the verge of financial collapse.

Healey wrote: “Emergency rates are not a permanent solution to a utility’s financial distress; they are intended to be temporary, approved only as necessary to avert a crisis. The goal is for SOBE to be operational and financially secure without emergency rates in place. The clear next step toward this goal is to ensure that all steam heat customers have accurate meters. With accurate meters. SOBE can bill customers based on their actual usage and rates can be set that are sufficient for SOBE to meet its obligations under” state law.

John C. Collins, SOBE’s receiver since Feb. 17 who asked for the emergency rate increase, said the company will be out of money by September or October without an immediate cash infusion.

In Healey’s report, he wrote 14 of SOBE’s 23 customers would see a 145% increase for steam heat usage between November and April under the emergency increase. One would see a 146% increase with two paying 73% more. The others would pay between 108% and 137% more during that time.

Between May and October, which Healey listed as the non-heating season, rates for 15 of SOBE’s 23 customers would increase by 75%. One would see a 76% increase and two would be at 24%. The rest would see an increase of 49% to 74%.

Michael J. Moran, Collins’ court-appointed attorney, wrote in a Thursday filing with the PUCO that the proposed rate failed to include an additional $9,927 in monthly charges to SOBE for some payroll expenses, sewer charges and Ohio Bureau of Workers’ Compensation premiums.

Also, Moran wrote the budget doesn’t include fees and expenses for him and Collins.

Moran wrote: “Although the receiver is attempting to reduce any unnecessary expense, in the prior receivership, the receiver and his counsel were approved for fees totaling approximately $120,000 for approximately a five-month term as receivership. Consideration should be given to anticipated fees going forward.”

The payment was $122,275.05, which included $54,146.20 that was mandated by a judge to be paid by last Sunday. Collins was granted a postponement on the payments, which were due May 9 because SOBE didn’t have the money.

Dominic Marchionda, whose companies own Wick Tower and Erie Terminal Place, both SOBE customers, called the proposed rate increases “concerning, very concerning. How do we get through this as landlords is a concern.”

Ryan Kelly, co-owner of the Ohio One Building, which is a SOBE customer, said: “It’s crazy to have this large increase and then another large increase because there won’t be a solution for a long time. There’s no long-term answer.”

Because several SOBE customers do not have working meters, Healey wrote: “It is currently not feasible to establish emergency rates based on actual usage” so proportional rate increases are needed. Healey wrote that the PUCO staff recommended Collins “continue to prioritize the replacement of missing and unreliable meters” and have them installed no later than Oct. 1.

Healey’s report states that once SOBE can collect accurate data regarding usage, a base rate increase can be established. Healey said PUCO staff isn’t recommending a strict deadline “at this point” for SOBE to “file a base rate case.”

Instead, PUCO staff wants monthly reports from Collins on the installation of meters; an accounting of expenses, including natural gas costs to Enbridge Gas Co.; an “accounting of revenues being generated by the approved emergency rates on a customer-by-customer basis;” any information regarding additional funding sources for SOBE; a status update on alternatives to renting boilers and any other information Collins “believes might assist staff and the commission in developing a long-term solution to SOBE’s financial situation.”

PUCO staff will review the monthly reports and any other information provided by Collins and make further recommendations to the commission, Healey wrote.

He wrote: “Depending on the substance of these reports, staff’s recommendations could include interim adjustments to emergency rates with a goal of SOBE eventually filing a base rate case to set non-emergency tariff rates.”

Collins filed the request as an emergency on May 21 with the PUCO directing its staff six days later to prepare a report so it can consider the rate increase.

SOBE EXPENSES

In a May 27 court report, Collins wrote the company’s monthly income is about $130,000 while its monthly expenses are about $220,000.

Its regular expenses for payroll and materials is about $80,000; rent for three boilers to provide heat to its customers paid to Power Mechanical Inc. of Newport News, Virginia, is $58,200; and “anticipated monthly payments” to Enbridge Gas Co. for gas is $80,000, Collins wrote.

Collins said, “The company is in the midst of a financial crisis” and will no longer be able to pay for three rented boilers it uses for steam heat by September or October.

Except for two partial payments made before he was appointed receiver and a recent payment of a $96,000 bill, Collins said Wednesday that the Enbridge monthly bills weren’t paid between about August or September 2025 to April.

Because of the late bills, Enbridge charged the maximum amount for a period of time and the amount owed is as much as $1,999,656.95. But Collins said Enbridge is working with SOBE and the bill could be reduced to “in excess of $500,000,” to be paid over an 18-month period. Healey wrote PUCO staff assumed a $750,000 amount to be repaid over 18 months.

Reg Martin, who served as SOBE’s court-appointed receiver from Sept. 26 until being replaced by Collins on Feb. 17, used $750,000 he received from Enbridge as part of that company’s settlement of the 2024 Realty Tower explosion to rent two of the three boilers. SOBE is renting the third boiler from Power Mechanical using its own funds.

However, numerous problems with the three boilers caused them to not provide heat during periods in January and February during the coldest time of the year with temperatures below zero degrees in February.

In Healey’s report, he wrote: “Mr. Collins stated in his motion that based on current financial conditions, it is likely the gift will be exhausted by September or October. Without additional revenues, SOBE will be unable to provide service to its customers. And because there is no provider of last resort, a ‘failure to continue to provide heating services will cause enormous harm and damages to many of the businesses in the downtown Youngstown area.'”

Healey wrote the monthly operational charge revenue requirement for steam heat is $96,686. The monthly natural gas charge revenue requirement includes the past money owed to Enbridge and SOBE’s actual monthly natural gas charges, which will fluctuate based on usage. For the calculations, PUCO staff used a gas cost of $3.259 per MCF (1,000 cubic feet).

City council on Wednesday agreed to pay up to $130,000 for a study that will offer long-term solutions to the SOBE issue and approved a resolution declaring the “existence of a local energy and public utility emergency arising from the financial crisis” of SOBE and “urging immediate intervention and assistance by the state of Ohio.”

Gov. Mike DeWine is monitoring the decision, but has rejected requests by Mayor Derrick McDowell for SOBE to receive state rainy day funds and from the recently-passed capital budget.

The study will take about three to four months to complete, McDowell said, adding, “Maintaining a temporary solution is as vital as having a permanent one.”