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Youngstown Thermal sale approved

PUCO signed off on deal Wednesday

YOUNGSTOWN — The sale of Youngstown Thermal LLC, a company that provides heating and cooling services to several downtown customers, has been approved by the state’s utility regulatory commission.

The Public Utilities Commission of Ohio on Wednesday approved the transaction that also included Youngstown Thermal Cooling LLC to Dublin-based SOBE Thermal Energy Systems LLC, which has managed the facility since June 2019.

After the deal closes, which, according to SOBE’s chief executive, should happen before the end of the year, the plan is to move on a strategy — including upgrades to the North Avenue plant — to capture more customers.

SOBE Thermal CEO Dave Ferro said he believes every downtown building should be on the system, but he has to prove it’s worthwhile and cost-effective to join. The company already has about 40 buildings on the system.

“Our strategy is to take over all the energy equipment in Youngstown … own it, maintain it and use nonfossil fuel as a primary source of energy, so we become 100 percent renewable and we’re lower priced. And we’re creating value for the community, but we’re also creating value environmentally,” Ferro said.

“History is the predictor of the future in the eyes of many, so we have to change history,” he said. “We’re in the process of changing history.”

The sale, agreed to 2019 is for $250,000, according to documents with PUCO.

Technical staff for PUCO recommended the commission approve the sale in late October, stating SOBE Thermal has the “managerial, technical and financial capabilities” to purchase and run the Youngstown Thermal companies.

SOBE Thermal and Youngstown Thermal jointly applied to the commission for approval in January.

It was reported in 2019 that Youngstown Thermal was placed into receivership in 2017 after PUCO was informed by the company’s former CEO that the business was in a financial struggle that could have caused an energy crisis in downtown. The company couldn’t ensure adequate service to its customers and was in danger of insolvency when the PUCO stepped in.

The large blow came when Youngstown Thermal lost Youngstown State University as a customer after YSU built its own steam plant. The loss of YSU as a customer exposed underlying financial problems at Youngstown Thermal.

YSU since has rejoined, Ferro said, and the DoubleTree by Hilton in downtown has committed verbally to joining and is reviewing the matter. Talks still are happening with Mercy Health’s St. Elizabeth Youngstown Hospital to join the system. Ferro said other buildings want to join, but he cannot discuss those sites.

As system operator, SOBE upgraded the utility system and put into place new operational procedures for efficiency, including a new package boiler and a new air-cooled chiller unit, according to the staff recommendation.

The company also repaired leaks in the system and implemented continuous monitoring and maintenance programs to identify and repair or correct distribution issues.

Ferro said about $2 million was spent on the upgrades.

“Staff views the past two years’ track record of system improvements and provision of reliable and adequate service as meeting the managerial and technical capabilities of operating and managing” the facilities, a PUCO document states.

Youngstown Thermal, having begun operations in 1895, is the oldest district heating and cooling facility in the U.S. It was designed to generate and distribute steam to heat all the businesses in downtown Youngstown using coal as its main source of fuel.

Ferro said the plant uses natural and synthetic gas as the feedstock now, but plans to switch to synthetic gas as the primary fuel “with the ability to go interchangeable.”

Plans are to build at least “a couple hundred thousand square feet” of prefabricated steel buildings in Lowellville to collect and shred plastics and tires to feed the plant. The material will be shipped by rail to Youngstown.

Ferro anticipates the facility will be built in the next 120 days.

“That facility will basically prepare our feedstock, so it will shred it and prepare it for consumption,” he said.

In November 2020, the Western Reserve Port Authority gave the preliminary OK to issue $20 million in bonds to help SOBE. Proceeds for the sale of the bonds would have been used for phased upgrades to the facility, including new boilers and chillers. Nothing with the issuance formally happened, however, port authority CEO John Moliterno said.

Still, the port authority stands “ready to assist them in anyway we can,” Moliterno said Wednesday.

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