U.S. Sen. Bernie Moreno said there may be a way to obtain federal loan guarantees to help downtown Youngstown businesses that get steam heat from SOBE Thermal Energy Systems LLC to get their energy elsewhere and not have to rely on the troubled utility company.

Moreno, a Republican, said he spoke Tuesday to Chris Wright, the U.S. secretary of energy, about the SOBE situation.

“Maybe there’s some federal loan guarantees that can help pay for individual buildings to get their own power generation facility,” Moreno said. “The savings in costs would pay that loan because those individual building owners may not have the capacity to get that loan. That’s what we’re working towards getting done.”

The Public Utilities Commission of Ohio on June 24 approved significant rate increases for the 23 downtown buildings on the SOBE system. Those buildings make up a majority of downtown Youngstown.

Michael J. Moran, the court-appointed attorney for John C. Collins, SOBE’s receiver since Feb. 17, filed a tariff rate schedule Thursday with the PUCO.

For 13 of the SOBE’s 23 customers, the increase that takes effect 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%.

Guy Coviello, Youngstown/Warren Regional Chamber’s president and CEO, who attended Tuesday’s meeting with Moreno, said the Department of Energy loan proposal “is a potential solution for the SOBE issue. If all goes well, we can have the solution implemented by the end of the year. We have to do due diligence to make sure it’s viable, but we’re optimistic it will be.”

SOBE’s customers would be required to borrow the money with the savings for having their own energy systems being almost enough to cover the loans, Coviello said.

After the rate increase, some SOBE customers said they were looking at purchasing boilers or switching to gas or electric heat.

Coviello said he couldn’t say how long it would take to cover the loans as each building has different needs.

“The Department of Energy guaranteeing the rate of the loans would be close to the savings,” he said. “If we can get the Department of Energy to meet with building owners and see if they can provide the loan guarantee, we’ll be in a good spot. We think it can get done quickly.”

A meeting is planned for today with building owners to further discuss the possibility, Coviello said.

Coviello said: “We have to see if the loans are available and we still have to get to the end of the year.”

The huge rate increases are “a non-starter” for SOBE’s customers, Coviello said.

Coviello said: “If the PUCO can hold off on the increase until we look at the buildings, we have a potential solution. We still have work to do. It’s a potential solution. We still have to figure out if it works for all 23 buildings.”

Coviello said the progress made at Tuesday’s meeting was “the most hope we’ve had in about 12 years.”

The meeting occurred at the Youngstown Business Incubator, which is also a SOBE customer.

Barb Ewing, YBI’s CEO, said: “We’re very grateful for Sen. Moreno’s efforts on our behalf. This is an incredibly complicated situation and the fact that he dug into it the way he did speaks volumes about his commitment to the Mahoning Valley. Speaking on behalf of all of the users, we appreciate his leadership and support.”

SOBE failed to provide heat to customers during parts of January and February with the latter occurring when the temperature was below zero degrees.

Moreno said: “We have a situation where this winter, it’s not possible, it’s probable and probably definite that there’s (23) buildings in downtown Youngstown that will have no heat. It’s crazy. This probably has been festering for a long time. Sadly, we have people who care more about the plight of illegal Haitian refugees in Springfield than the plight of American citizens in Youngstown. I’m not going to put up with that.”

Moreno called the situation “a total disaster,” and it is important to help as well as continue the conversation on the issue.

Collins said July 25, the day after the PUCO granted the emergency rate hike request: “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.”

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. Without the significant increases, Collins said SOBE would be out of business by then.

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.

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.

Before the company was put in receivership, David Ferro, SOBE’s CEO, scrapped the company’s boilers and later defaulted on payments to a company leasing a boiler to provide steam heat. Ferro abandoned the Youngstown facility in late September after the repossession of the rented boiler was granted by a judge.

Collins requested the Ohio Environmental Protection Agency revoke the Feb. 14, 2024, permit it issued for SOBE to convert rubber tire chips into synthetic gas at the Youngstown location. The proposal received strong opposition from Youngstown city officials and environmentalists.

In a June 24 letter, Ohio EPA Director John Logue officially revoked the permit.

That same day, Ferro appealed the decision to the EPA.

Moran on Tuesday filed a motion on behalf of Collins with Mahoning County Common Pleas Court Judge Anthony Donofrio “to assess sanctions against David Ferro for interfering with the receivership.”

Moran wrote that Collins “made the determination that installation of that system was not feasible and that the rights were not of interest to any known prospective purchasers or operators of SOBE and its assets. Accordingly, the receiver requested that the permit be revoked pending an appeal of the approval of such permit filed by the city of Youngstown. Without any authority whatsoever, David Ferro, purporting to act on behalf of SOBE, filed an appeal of the revocation.”

Moran requested Donofrio issue instructions to Collins “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 and to effectuate the termination of the appeal of the revocation.”

SOBE is in such dire financial straits that Moran filed a separate motion Monday disclosing that after paying an Enbridge bill, the company had only about $45,000 in its bank account.