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YOUNGSTOWN -- The financially troubled company that provides steam heat for most of downtown Youngstown is returning two of its three rented boilers until October to cut expenses and agreed to a $750,000 settlement with Enbridge Gas Co., to be paid in $40,000 monthly installments, for late bills.
In a Wednesday interview with The Vindicator, John C. Collins, receiver for SOBE Thermal Energy Systems LLC, and Michael Moran, his court-appointed attorney, said the return of the two boilers will cut the company's monthly expense for that equipment from $58,200 to about $28,000.
Moran said: "We are still facing a very, very, very difficult situation, but this will help reduce some costs."
The company has about $70,000 in its regular fund and owes about $86,000 to Enbridge for gas bills for May and June, Moran said.
On top of its regular bills to Enbridge, SOBE came to a $750,000 settlement with the gas company for unpaid gas bills.
Enbridge billed $1,999,656.95 for unpaid bills when Reg Martin, SOBE's previous receiver, made only two partial payments to the company after taking over a company on Sept. 26 that was nearly in receivership under its previous owner.
Collins, who took over Feb. 17 as receiver, and Moran worked out a settlement to reduce that amount to $750,000. Starting in August, SOBE will pay $40,000 a month, over an 18-month period, on top of its regular Enbridge bills to cover the money previously owed, Moran and Collins said.
But with the company in financial peril and concerns about its 23 downtown customers paying the huge emergency rate increases, imposed by the Public Utilities Commission of Ohio, Moran and Collins said they are worried about the company's future.
"Payroll and the Enbridge bill would exhaust quite a bit of our money," Moran said.
SOBE's customers are looking for ways to get off the system after the rate hike with most paying a 93% increase, effective June 30, and an additional 162% increase for most from November to April.
"It's a big concern," Collins said. "We're searching for a permanent solution, and we don't have one as of July 29, 2026. But we continue to search. The rate hikes are terrible for the customers and this isn't a permanent solution. The situation is not good from a financial perspective. There's not enough money coming in, but we're hopeful."
Without the emergency rate increase, which is being contested by the city of Youngstown and the Office of the Ohio Consumers' Counsel, SOBE would have been unable to make its payments by September or October.
SOBE was able to pay for two of the three boilers it was using thanks to a $750,000 payment from Enbridge as part of the latter's $1 million settlement with the PUCO on the Realty Tower explosion.
Collins said there's about $205,800 left from that payment.
The settlement account is used to only pay for the leasing of boilers and to purchase meters to install on SOBE customers, according to a PUCO order.
SOBE ordered four meters on May 4 with shipment delayed until recently, Collins said. SOBE will order other meters as they become available, Collins said.
Some SOBE customers don't have meters at all while most others have old, reliable ones.
The PUCO ordered SOBE to have all meters installed by Oct. 1, but with the delays in getting these four and the inability to get others, that may not occur.
BOILERS RETURNED
The return of a 650-horsepower boiler and a 250-horsepower one -- the latter was paid with Enbridge settlement money -- to Power Mechanical Inc. of Newport News, Virginia, reduces that monthly expense from $58,200 to about $28,000.
SOBE kept an 800-horsepower boiler that is being paid with Enbridge settlement money.
The company will lease another 800-horsepower boiler in October for its customers, Collins said.
The SOBE system failed at times in January and February -- including when temperatures were below zero -- using the three boilers Martin rented.
For 13 of the SOBE's 23 customers, the emergency rate increase, which took effect 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%.
Moran and Collins said if SOBE's customers pay the increases, the company will have sufficient funds.
Both acknowledged there are concerns about customers paying and/or leaving the SOBE system. Of its 23 customers, 11 had delinquent accounts, according to a May 27 court filing by Collins.
"We're hoping we get paid based on the new tariffs and if so, we should have sufficient funds," Morans said. "If not, it will be a big struggle."
Collins said: "If we don't get the rate increase payments, we can't pay anyone."
Moran, Collins, PUCO officials and city officials met Wednesday with Mahoning County Common Pleas Court Magistrate Nicole Butler to discuss SOBE's ongoing issues.
LEGAL ISSUES
Decisions are expected as soon as next week from Judge Anthony Donofrio on two issues -- paying $55,570 owed to Martin and Kenneth R. Goldberg, SOBE's previous legal counsel; and stopping David Ferro, who was SOBE's CEO when he walked away from the Youngstown facility in September, from seeking to appeal a canceled permit to convert rubber tire chips into synthetic gas there.
The Ohio Environmental Protection Agency revoked that pyrolysis permit June 24 at the request of Collins, who said it's not feasible and no one is interested in it. Also on June 24, Ferro appealed the decision.
While the EPA has essentially dropped the matter, 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's plant was gutted in 2022 when Ferro 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. The boiler was repossessed on Sept. 30, shortly after Ferro abandoned the facility.
It would cost about $13 million to build back SOBE's plant, Collins said.
Martin and Goldberg were supposed to be paid the $55,570 by May 9, but it kept getting delayed because SOBE doesn't have the money.
The PUCO in its June 24 decision permitted SOBE to pay Martin and Goldberg six monthly payments of $9,261, starting this month. In a July 13 motion filed with Donofrio, Goldberg asked that it be reduced to four monthly payments of $13,892, starting this month.
Moran said Wednesday that paying Martin and Goldberg starting this month was "optimistic" and "it's optimistic in August to pay Reg Martin if we can collect the new tariffs. If we can't get the payments, we can't pay anyone."