YOUNGSTOWN — A 93% rate increase for most of SOBE Thermal Energy Systems LLC’s downtown Youngstown will go into effect as soon as Monday.

In a Thursday interview with The Vindicator, John C. Collins, SOBE’s receiver, and Michael Moran, his court-appointed attorney, said the rate increase begins as soon as they file a final notice with the Public Utilities Commission of Ohio, which will likely be Monday or Tuesday.

“That will occur very quickly,” Moran said. “Then, the rate change will be in effect.”

The PUCO on Wednesday agreed to a recommendation from its staff — which originated as a May 21 request from Collins — for an emergency rate increase for SOBE’s 23 customers, which make up most of downtown.

For 13 of the 23 customers, the immediate increase is 93% with two at 92%, one at 91% and two at 36%. The five other customers will pay between 64% and 80% more.

That is for the nonheating season between May and October.

Between November and April, the rate will increase by another 162% for 14 of SOBE’s 23 customers. One will pay 163% more during those six months with two paying 85% more. The six others will pay increases between 123% and 159%.

Collins said: “This is a drastic, drastic increase, and it’s terrible for the customers. It’s necessary, but it’s terrible for the customers. We recognize the financial burden they’ll be under.”

Without the significant increases, SOBE would be out of money by September or October, Collins said.

Asked about customers leaving the system because of the rate increases, Moran said: “That will make problems if we lose customers as it would have to be paid by the remaining customers.”

Collins said: “That is a possibility. We understand that. But I’ll stand by the (May 27) report that there will not be sufficient money to run the business past September/October. We haven’t found any funding from any source. We were hoping for help from the state, but that’s not going to happen. It’s a terrible predicament for everybody.”

The additional funding will keep SOBE afloat, but Collins said, “It is not a permanent solution. We’ve got to find a different way to build a boiler house and get the infrastructure to where this is a viable ongoing business to provide steam services to our customers.”

It would cost about $30 million to properly upgrade SOBE’s aging system that was gutted in 2022 when David Ferro, the company’s CEO, razed the boiler house and sold the three boilers for scrap. He then had the company lease a boiler, but stopped paying the monthly rental fee with it possessed on Sept. 30.

As for funding to bail out SOBE, Collins said: “It’s not going to come from the state of Ohio, which is what we always thought. It’s not going to happen. We need to find a company to purchase the plant. We have some interested parties. It would be a significant investment to make it happen.”

Collins said: “I have not given up, but it’s a difficult matter. There isn’t an easy solution. Making it work is a very difficult proposition to achieve. We’re trying.”

Before the rate increase, SOBE’s monthly income was about $130,000 while its monthly expenses were about $220,000.

SOBE is currently leasing three boilers, using a $750,000 payment to the troubled utility company from Enbridge Gas Co., to pay for two of them as part of Enbridge’s $1 million settlement with the PUCO on the Realty Tower explosion. That money will run out in September or October, Collins said.

One of SOBE’s largest expenses is money it owes Enbridge for unpaid gas bills.

Because SOBE only started paying the monthly gas bills in April after a previous receiver made only two partial payments since September, the company owes as much as $1,999,656.95 to Enbridge.

Discussions with Enbridge will hopefully bring that cost down to “over $500,000,” which Collins said he expects SOBE to pay over 18 months though discussions with Enbridge haven’t finalized details.

If that is worked out, the rate increases would be reduced as SOBE is expected to pay $80,000 a month for up to 18 months to Enbridge, according to PUCO documents.

Some SOBE customers are considering buying their own boilers or switching to gas or electric heat.

“Customers will look at what’s in their best interests as boilers are not a cheap fix,” Moran said.

Moran said some of the buildings cannot fit large boilers inside them.

As directed by the PUCO, SOBE is prioritizing the purchase of meters for its customers as some don’t have any and others have old, unreliable ones. The meters will be installed by Oct. 1.

After the meters are installed and accurate readings can occur, rates can change for SOBE customers, Moran said, with some possibly paying more and others perhaps paying less.

SOBE sent disconnection notices to at least three of its customers on June 8, but Collins said Thursday that the utility is not contemplating any lawsuits or disconnecting customers for now.

Moran said: “That could change, but right now, in the immediate future, there won’t be any disconnects. By the immediate future, I mean 30 days.”

Collins also put an end to an effort by Ferro to convert rubber tire chips into synthetic gas at the Youngstown facility.

Collins requested the Ohio Environmental Protection Agency revoke the Feb. 14, 2024, permit it issued for the process that received strong opposition from Youngstown city officials and environmentalists.

In a Wednesday letter, Ohio EPA Director John Logue officially revoked the permit.

Collins said: “Everyone we talked to in the industry said they wouldn’t be using it anyway, and it’s not a worthwhile endeavor. We’re not going to pursue it since we weren’t going to use it.”