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YOUNGSTOWN - SOBE Thermal Energy Systems LLC lost three of its customers and reconnected one, leaving the troubled steam heat company that services most of downtown with even more financial uncertainty.
SOBE receiver John C. Collins and Michael Moran, the company's attorney, said the utility has 19 remaining customers after the Public Utilities Commission of Ohio granted significant emergency rate increases June 24 in an attempt to provide SOBE with stability. The rate increases have failed to generate revenue to help the company, Collins and Moran said.
The PUCO approved the rate hikes for SOBE's customers, with a majority of them paying about 93% more, effective June 30. Three of the 23 buildings on the system have left it, Collins and Moran said.
Collins said those three are 6 W. Federal St., the former Chase Tower owned by Ashiana Homes Inc.; the planned Youngstown Innovation Hub for Aerospace and Defense at 107 Vindicator Square, the former Youngstown Vindicator production building; and the Apollo Event Center, 117 S. Champion St.
Moran said: "We understand why they made the decision. There are people trying to stick it out. We're concerned others may leave the system because of the uncertainty. In fairness, they have to cover themselves. We don't know how we're going to make it."
SOBE in early October disconnected 22 Market Street Ohio LLC, which is developing the former Mahoning National Bank building, and FNB Youngstown LLC, which owns the First National Bank Building, also known as Central Tower.
The two buildings were disconnected because of the failure to pay their bills, which were more than 91 days delinquent.
But Collins said FNB paid its delinquent account, and SOBE reconnected steam heat to the building.
FNB had owed $37,360 to SOBE with $26,900 of it more than 91 days delinquent, according to a Sept. 2 report filed by Collins with the Mahoning County Common Pleas Court.
Meanwhile, SOBE has an ongoing issue with West 34 Investors LLC, which owns Wick Tower, and Erie Terminal Place LLC, which owns Erie Terminal Place, over late payment issues. Dominic Marchionda runs both companies.
SOBE sent disconnection notices to the two companies, but PUCO Administrative Law Judge Jacky Werman St. John ruled Oct. 15 that the utility could not terminate service to the buildings "during the pendency of the complaint due to the nonpayment of the amount disputed related to the emergency rates approved by the commission."
Both buildings have 40 residential units.
Werman St. John on Monday granted requests by the two companies to intervene in the SOBE case in front of the PUCO.
West 34 paid $10,752.72 and Erie Terminal paid $12,000 in money owed a few weeks ago. But there are still significant monies owed by both companies, according to tentative agreements.
Gregg Rossi, attorney for both companies, said the tentative agreements are "unenforceable" as they were "unexecuted and never submitted to PUCO as a stipulation and never approved by PUCO."
Moran said SOBE had a deal worked out with Marchionda, but that changed after the owner of the buildings received a favorable ruling from Werman St. John.
Moran said he didn't know how much money the two buildings owe SOBE.
With the loss of three customers and shutting off FNB, the money not paid by them is going to have to be covered by SOBE's other clients, Moran said.
The rate hike authorized by the PUCO called for 13 of the SOBE's then 23 customers, to pay 93% increases for the non-heating season between May and October. Two others were to pay 92% more with one at 91% and two at 36%. The five other customers are paying between 64% and 80% more.
That same PUCO decision called for the rate to increase by an additional 162% for 14 of SOBE's customers with one charged 163% more between November and April and two billed 85% more. The six others were to be charged increases between 123% and 159%.
But Moran and Collins said that additional rate increase, peaking at 163% more and starting Sunday, is not necessarily correct and is too high.
Moran said: "It's likely because of the increase in gas costs during the colder months. You don't know the actual cost. It depends on how bad of a winter it is."
Collins said: "The bill will go up because of the cost of gas. It won't go up another 163%."
With the loss of customers, Moran said: "The operating expenses will be reallocated among fewer buildings. The gas consumption will go down because these are big customers," besides Apollo.
Collins and Moran said SOBE hasn't made any additional money with the huge rate increase because several customers refuse to pay it.
Collins said SOBE will be out of money by January without financial help from the government saving it from defaulting on even more payments than at present.
Collins said: "We've heard nothing concrete about state or federal government assistance. There's nothing concrete at all."
SOBE came to a settlement in July with Enbridge Gas Co. for past due bills. The amount was negotiated down from $2,226,662.62 to $724,324.42 with the agreement calling for SOBE to pay $40,240.25 a month, starting in August, for 18 months as well as regular gas bills.
But SOBE doesn't have the money to pay Enbridge and is already three months late with the payment plan.
SOBE returned two rented boilers in late July-early August and kept an 800-horsepower boiler, the largest at its Youngstown location, which reduced that monthly cost from $58,000 to $28,400.
SOBE has about $100,000 left from a $750,000 payment given to it by Enbridge as part of the gas company's $1 million settlement with the PUCO over the Realty Tower explosion investigation. SOBE uses that money to lease the boilers.
A second 800-horsepower boiler is on order, but hasn't arrived from Power Mechanical Inc., the Newport News, Virginia, company that leases the boilers.
That second boiler will double the rental cost for SOBE to $56,800.
It is supposed to arrive this week, Collins said, but Power Mechanical "has committed to a date for the arrival before and then they change it on us. If we didn't have to get another boiler, we could last four or five more months, but we can't chance that. It's for redundancy purposes and to make sure our customers have heat if the other boiler goes down. But when we get it, it doubles our boiler payment obligation."
SOBE was put into court-ordered receivership Sept. 26, 2025, after the PUCO determined the utility company could no longer provide services to its customers.
A rented 800-horsepower boiler was repossessed Sept. 30, 2025, from SOBE because the company defaulted on paying for the equipment that provided heat to its then 23 downtown customers. That resulted in SOBE abandoning the city with Reg Martin appointed receiver at the request of the PUCO.
But with SOBE customers complaining about service failing a number of times during January and February, the PUCO had Martin removed as receiver with Collins replacing him Feb. 17.
The PUCO will consider Wednesday a joint request from the city of Youngstown and the Office of the Ohio Consumers' Counsel to require an expiration date for the significant emergency rate increases for downtown steam heat customers.
If an end date isn't set, the two entities asked the PUCO to require SOBE to file an application for new permanent rate increases.
Also, the two entities urged the PUCO to require language that the emergency increases are subject to refunds.
In the Sept. 14 joint filing, the city and the OCC did not object to the major rate increases granted by the commission and instead made the other requests of the PUCO.
An attorney for the PUCO staff argued in a Sept. 21 response that the request for an emergency end date and the inclusion of language that the increases are "subject to refund" aren't valid.