The Public Utilities Commission of Ohio’s staff recommends huge emergency rate increases for SOBE Thermal Energy Systems LLC’s downtown Youngstown customers — 145% for most of them during the six months when the steam heat is most used and 75% during the rest of the year.

The report filed Monday by Christopher Healey, PUCO’s Rates and Analysis Department’s chief of accounting and finance, reads: “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.

The PUCO board next meets June 24.

Healey wrote in the recommendation that the rate increases, if approved by the PUCO, could take effect as soon as July.

SOBE provides steam heat to 23 buildings — a majority of downtown Youngstown’s buildings.

The utility is facing a financial crisis with John C. Collins, SOBE’s receiver, saying it is on the verge of financial collapse and will be out of money by September or October without an emergency cash infusion.

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 recommends Collins “continue to prioritize the replacement of missing and unreliable meters” and have them installed no later than Oct. 1.

Healey’s report blacks out the specific names of the customers next to the proposed rate increases, what they currently pay and what they would pay if the PUCO approves the emergency hikes.

Of the 23 customers, 14 of them would see a 145% increase for steam heat usage between November and April. One would experience a 146% increase with two paying 73% more. The others would pay between 108% and 137% more during that time.

Among SOBE’s largest customers are Youngstown City Hall and police building; Wick Tower; Erie Terminal Place; FNB Youngstown LLC, which is developing Metropolitan Tower; the Ohio One Building; and 22 Market Street Ohio LLC, which is developing the former Mahoning National Bank Building.

Dominic Marchionda, whose companies own Wick Tower and Erie Terminal Place, said the proposed emergency rate increases are “concerning, very concerning. How do we get through this as landlords is a concern. I honestly don’t see the newer projects coming in (FNB and 22 Market Street) staying on the system. Downtown residential housing is getting harder and harder and now it got tougher. I don’t want to put in my own boiler, but this is concerning.”

Ryan Kelly, co-owner of the Ohio One Building, said he was aware that a rate increase was coming and that most of SOBE’s customers don’t have meters.

“But it’s crazy to have this large increase and then another large increase because there won’t be a solution for a long time,” Kelly said. “There’s no long-term answer. Some of these increases were avoidable as they could have negotiated better rates with Enbridge. Hopefully we can come to a solution.”

The PUCO staff report shows one customer would see its current monthly rate from November to April go from $15,006 to $36,822. Another would go from $11,500 a month to $23,924.

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%.

One customer would see its current monthly rate during that time go from $26,439 to $41,505. Another would go from $17,150 to $28,650.

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.

In a May 27 court report, Collins painted a bleak picture of SOBE’s finances.

Collins, SOBE receiver since Feb. 17, 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).