The Office of the Ohio Consumers’ Counsel filed a motion to intervene on behalf of SOBE Thermal Energy Systems LLC’s residential customers in downtown Youngstown in front of the Public Utilities Commission of Ohio, which granted the troubled utility company a huge rate increase.

With SOBE’s financial situation in dire straits and potentially facing insolvency, the PUCO voted June 24 for an emergency rate increase with most of its customers paying 93%, effective June 30, and an additional 162% increase for most from November to April.

SOBE provides steam heat to 23 buildings, which make up most of downtown Youngstown, and includes residents in Wick Tower and Erie Terminal Place.

John Finnigan, an OCC attorney, filed the motion to intervene, writing: “These emergency rates are a concern because they were decided without the usual consumer protections afforded by traditional ratemaking process under (state law), which provides a clear, transparent way to establish new utility rates. Also of concern to OCC is the PUCO’s failure to require a permanent rate application filing to replace the temporary rates and its failure to order reconciliation of permanent and temporary rates.”

The OCC is the statewide legal representative for Ohio’s residential consumers in matters related to utilities.

Finnigan wrote in his motion to the PUCO that state law “provides, in part, that any person ‘who may be adversely affected’ by a PUCO proceeding is entitled to seek intervention in that proceeding. The interests of Ohio’s residential consumers may be ‘adversely affected’ by this case, especially if the consumers were unrepresented in a proceeding where the PUCO has approved this emergency rate hike due to SOBE’s insolvency.”

Finnigan added: “OCC’s advocacy for residential consumers will include, among other things, advancing the position that emergency rates should be temporary, subject to reconciliation with permanent rates and no more than what is reasonable and lawful under Ohio law, for service that is adequate under Ohio law. OCC’s position is therefore directly related to the merits of this case.”

Finnigan wrote that OCC’s “intervention will not unduly prolong or delay the proceedings,” and “with its longstanding expertise and experience in PUCO proceedings and consumer protection advocacy, will duly allow for the efficient processing of the case with consideration of the public interest. OCC regularly intervenes and participates in cases regarding utility rate increases.”

Matt Schilling, a PUCO spokesman, said OCC’s request will be considered by the commission issuing an entry or by a PUCO administrative judge.

“Intervention grants parties the right to participate in hearings and introduce evidence,” Schilling said.

As for the OCC’s concern about the emergency rate given by the PUCO to SOBE, Schilling said such rates “are inherently temporary.”

In granting the emergency rate increase, the PUCO wrote: “First, the existence of an emergency is a condition precedent to any grant of temporary rate relief, Second, the public utility’s supporting evidence must be reviewed with strict scrutiny, and that evidence must clearly and convincingly demonstrate the presence of extraordinary circumstances which constitute a genuine emergency situation. Next, emergency relief will not be granted pursuant to (state law) if the emergency request was filed merely to circumvent, and as a substitute for, permanent rate relief under (state law). Finally, the commission will authorize emergency rates only at the minimum level necessary to avert or relieve the emergency.”

In granting SOBE’s rate increase, 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 $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. 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 on Feb. 17.

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 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 would have run out in September or October without the rate increases, Collins said.

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%.

SOBE’s customers are trying to get off of the struggling utility system that proved unreliable this past January and February, the coldest months of the year.

U.S. Sen. Bernie Moreno said during a June 30 visit to the area that he spoke to Chris Wright, the U.S. secretary of energy, about a possible way to obtain federal loan guarantees to help SOBE customers get their energy elsewhere.

But that effort failed because the DOE has a minimum $250 million requirement for loan guarantees.

There is a meeting today with state Sen. Al Cutrona, R-Canfield; Guy Coviello, president and CEO of the Youngstown/Warren Regional Chamber; the Ohio Treasurer’s Office, and downtown building owners.

The discussion centers on the state treasurer’s Buckeye Business Advantage linked deposit program. It permits small businesses to work with a participating bank or credit union to apply for a loan with the treasurer’s office determining if the businesses are eligible.

Upon approval, the treasurer’s office would deposit funds with the financial institution at a below-market interest rate. The financial institution would reduce the interest rate on the small businesses’ loans in conjunction with the offsetting deposit by the treasurer’s office.

The program isn’t available to nonprofits or government agencies.

City hall and the attached police station are among SOBE’s largest customers.