Trending
The Public Utilities Commission of Ohio directed an administrative law judge to schedule a hearing on revisiting its vote to approve huge emergency rate increases for SOBE Thermal Systems LLC customers.
The commission voted 5-0 Wednesday to grant requests for a rehearing on its June 24 approval of emergency rate hikes to SOBE customers by the city of Youngstown and the Office of the Ohio Consumers' Counsel.
With SOBE in serious financial peril, the PUCO approved steam heat rate increase for all 23 of the utility company's customers, which make up a majority of the downtown Youngstown buildings. Most of those customers are paying 93% increases that took effect June 30, with an additional 162% for most from November to April.
The PUCO's Wednesday vote directs an administrative law judge "to issue a hearing date and procedural schedule as expeditiously as possible," according to Chair Jenifer French.
Matt Schilling, PUCO spokesman, said the administrative law judge would issue an entry as soon as possible, likely this week, to set the hearing date.
Attorneys from the city, OCC and SOBE would participate in that administrative hearing, Schilling said. After the hearing, the administrative law judge will draft an order to the PUCO as to whether to uphold, modify or reject the rate increases and it would be up to the commission to act on her recommendation, Schilling said.
A PUCO case entry, filed Wednesday, states the commission will decide among those three choices after the administrative hearing "on the revenue requirement and rate design of the emergency rates authorized by the commission."
As for how long the administrative hearing would last, Schilling said he wasn't sure.
"This will be a pretty unique case," Schilling said. "It's not super voluminous. It should take one or two days. But it's up to the OCC and the city to present evidence and question witnesses."
The PUCO case entry on Wednesday points out that state law "does not include a requirement to hold a hearing before approving emergency rates. Due to the exigent circumstances in this case, it was not possible to hold a hearing prior to authorizing the emergency rates. The genuine emergency circumstances presented by SOBE's financial distress and service issues required that emergency rates be imposed to prevent injury to the public's safety and welfare. There was insufficient time to hold even a limited hearing on an expedited schedule due to the monthly expenditures that significantly outpaced revenues."
The case entry adds that the PUCO "finds that a hearing should be held to allow the parties to present additional evidence and to allow the commission to further review the revenue requirement and rate design for the emergency rates on a forward basis. At the hearing, intervenors will have the opportunity to present alternatives to the emergency rate increase. Meanwhile, the emergency rates will remain in effect as the approved filed rates."
Andy Resnick, the city's spokesman, said: "The decision to grant us a rehearing proves what we've said all along - the future of downtown Youngstown's utility system is too important to ignore. This is about protecting our downtown businesses, the residents and our ability to deliver core government services across the city. Downtown ratepayers shouldn't have to pay the price for the operational failures they didn't create."
Resnick added: "This decision keeps the momentum moving toward a real fix as the temporary Band-Aids that have been discussed to date, and tried, have not been enough. Our goal has always been a permanent, reliable heating and cooling system that downtown can count on. To make that happen, the city is in active conversations with the state and finalizing a plan to stabilize the current system. We are committed to ensuring we do everything we can to get this right before the winter."
Mayor Derrick McDowell is continuing discussions with Gov. Mike DeWine and his office on possible options to save the troubled company with state funding.
If the state provides funding, it may be for a smaller SOBE system that doesn't serve all of its current 23 customers.
APPEALS
The city and the OCC filed applications to the PUCO for rehearing on July 24, 30 days after the commission's decision to grant SOBE's emergency rate increase.
For 13 of the SOBE's 23 customers, the emergency rate increase, effective June 30, is 93% with two at 92%, one at 91% and two at 36%. The five other customers are paying 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%.
In the city's July 24 motion to appeal, with a minor amendment made Monday, Law Director Adam Buente argued the PUCO's order "is unreasonable and unlawful."
In the filing, Buente raised six arguments: the PUCO didn't make sufficient findings to justify the emergency rates, the city questions the PUCO's authority to replace existing contractual rates, the proportional-share allocation methodology lacks evidentiary support because some customers don't have functioning meters, the commission failed to consider the impact of the emergency rates on governmental customers, the commission should require additional accountability regarding expenditures of emergency revenue and the city asked the PUCO to clarify that the emergency rates are temporary.
John Finnigan, an OCC attorney, wrote in a July 24 motion to appeal: "The PUCO decided this case on a fast track, with no procedural schedule and no evidentiary hearing," and the OCC wants to "intervene in this case to give a voice to the residential consumers adversely affected by the PUCO's finding and order."
The OCC, the statewide legal representative for Ohio's residential consumers in matters related to utilities, contends the PUCO erred by failing to require an application for permanent rates and for failing to set an end date for the emergency rates, and that the PUCO should have required language that the increases were subject to refund.
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 that "it is not a permanent solution," and one must be found to make the utility company viable.
It would cost about $13 million to build back SOBE's plant, Collins said.
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 as receiver on the recommendation of the PUCO.
At Collins' request and with the PUCO staff's recommendation, the commission voted June 24 for the emergency rate increase for SOBE customers.
Collins reported about $130,000 in monthly revenue and about $220,000 in monthly expenses.
Some SOBE's customers are looking for ways to get off the system saying they are unable to afford the large emergency rate increases.