The city of Youngstown requested the Public Utilities Commission of Ohio vacate or modify an order that granted significant rate increases to SOBE Thermal Energy Systems LLC, which provides steam heat for most of downtown, and grant it permission to intervene in the matter.

Law Director Adam Buente, on behalf of the city, made the requests in a filing Friday with the PUCO.

The city’s request — like one made June 16 by the Office of the Ohio Consumers’ Counsel — to intervene will be considered by the commission or by a PUCO administrative judge. The OCC is the statewide legal representative for Ohio’s residential consumers in matters related to utilities and is seeking to intervene for residential tenants on the SOBE system.

The city requested the PUCO revisit its June 24 vote for an emergency rate increase for SOBE’s customers, with most paying 93% more, effective June 30, and an additional 162% increase for most from November to April.

Buente wrote: “The order is unreasonable and unlawful.” He cites several reasons, including:

● The PUCO “failed to make sufficient findings demonstrating that the approved emergency rates constitute the minimum relief necessary under (a state law). Although the order concludes that the statutory standard has been satisfied, it does not explain why each component of the approved revenue requirement is necessary or why less burdensome alternatives were rejected.”

* The PUCO “improperly replaced existing tariffs and contracts without making specific findings concerning its authority to impair existing contractual rights or the necessity of doing so. The order broadly states that the operational charge and natural gas charge replace all existing tariffs and contracts without distinguishing between approved tariffs, negotiated service agreements or government contracts.”

* The PUCO’s decision to raise rates “lacks adequate evidentiary support” because numerous customers lack functioning meters. The city wants “further evidentiary development before implementation of this allocation methodology.”

* The commission “failed to adequately consider the impact upon governmental customers and the public interest” and doesn’t “address the fiscal consequences imposed upon municipal government or whether phased implementation or alternative recovery mechanisms should be considered for governmental customers.”

* The commission “should require greater transparency and accountability regarding expenditure of emergency revenues.”

* The commission “should clarify that the emergency rates are temporary and establish objective standards governing their modification or termination. Absent such guidance, temporary emergency relief risks becoming indefinite without the procedural protections associated with a permanent rate case.” The PUCO has stated the rates are temporary, but hasn’t said how long they’d be in effect.

Buente also requested Friday that the PUCO grant intervenor status to the city.

Buente wrote: “The city’s interest arises not only from its status as a customer, but also from the consequences of disruptions in service relating to municipal operations, public health and municipal infrastructure. When the system fails or operates inadequately, the city experiences the consequences immediately in the form of operational disruption, financial expense and risk to public safety. Because the city is a ratepayer whose property and operations depend upon the utility at issues, it possesses a direct and legal protectable interest in this proceeding.”

In granting SOBE’s rate increases, the PUCO concluded “this emergency relief is not an attempt to circumvent or substitute permanent rate relief.” The PUCO will also get monthly reports on SOBE.

Without the significant rate increases, SOBE would be out of money by September or October, said John C. Collins, its receiver since Feb. 17.

The additional funding will keep SOBE afloat, but Collins said after the PUCO granted the rate hike, “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 $13 million to build back SOBE’s plant, Collins said.

To replace SOBE’s underground distribution pipes would cost about $17 million, but Collins said he, the PUCO and others don’t believe “that is necessary.”

SOBE’s plant was gutted in 2022 when David Ferro, the company’s CEO, razed the boiler house and sold the three boilers for scrap. Ferro then had the company lease a boiler, but stopped paying the monthly rental fee with it possessed on Sept. 30. He abandoned the Youngstown plant with a judge appointing Reg Martin on Sept. 26 as SOBE receiver. Collins replaced Martin, who faced criticism and scrutiny from SOBE customers, as receiver.

Ferro wanted the Youngstown facility to use pyrolysis, which converts rubber chips into synthetic gas. That received significant pushback from residents and three one-year moratoriums by Youngstown City Council on the use of the process in the city. The Ohio Environmental Protection Agency issued a permit on Feb. 14, 2024, for SOBE to move ahead with its plans.

Collins asked the Ohio EPA on June 19 to revoke the permit, saying the process wasn’t feasible or of interest to anyone interested in taking over SOBE’s operations.

Ohio EPA Director John Logue revoked the permit on June 24. On that same day, Ferro appealed the decision.

Michael J. Moran, Collins’ court-appointed attorney for SOBE, asked a Mahoning County Common Pleas Court judge on June 30 to permit his client “to take action to strike or otherwise cause the dismissal of such permit revocation appeal and to issue sanctions against David Ferro for the costs involved in this motion to effectuate the termination of the appeal of the revocation.”‘

The PUCO on June 24 granted Collins’ request for large rate increases.

For 13 of the SOBE’s 23 customers, the increase, effective June 30, 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 non-heating 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%.

City council and the board of control last month agreed to pay up to $130,000 to a law firm for a study that will offer long-term solutions for SOBE. The study is supposed to take three to four months.

Meanwhile, SOBE’s customers are looking for ways to get off the system saying they are unable to afford the large emergency rate increases.

Some SOBE customers attended a Tuesday meeting with the state treasurer’s office along with the 7 17 Credit Union and Brewer-Garrett Co. for a preliminary discussion to use the treasurer’s Buckeye Business Advantage linked deposit program. The credit union would loan the money needed to Brewer-Garrett for five years at ideally no interest. Some SOBE customers could also choose to work directly with 7 17 through this program.

If the plan is implemented, those going with Brewer-Garrett would have the company install heating systems in the buildings on the SOBE system with the cost paid over a period of 20 years through an additional heating rate – around 10% – or a separate service fee to pay the cost of new systems for each customer.

Some of the money paid to Brewer-Garrett would go into escrow to come up with a long-term strategy for heat downtown.

After those 20 years – or earlier if a building decides to pay it off sooner – Brewer-Garrett would sell the individual heating systems at an amortized rate to customers.

Nothing is close to being finalized as the discussion occurred only a few days ago.