The Gongwer Blog

by Nick Smith, Staff Writer

Feds Announce $1.5B Holtec Loan to Restart Palisades

Posted: April 12, 2024 3:05 PM

Holtec International's effort to restart the Palisades Nuclear Power Plant was given a huge boost Wednesday with the U.S. Department of Energy's announcement it was offering a $1.52 billion conditional loan for the project.

An announcement of the conditional loan through the department's Loan Programs Office came Wednesday morning event at the facility in Van Buren County's Covert Township.

If Holtec can obtain federal permitting and reopen the facility, it could become the first shuttered nuclear power plant in the nation to be restarted.

Operations at the 800-megawatt plant ceased in May 2022. At the time of its closure, it was one of three operating nuclear plants in the state.

"Nuclear power is our single largest source of carbon free electricity, directly supporting 100,000 jobs across the country and hundreds of thousands more indirectly," Secretary of Energy Jennifer Granholm said in a statement. "President Biden's Investing in America agenda is supporting and expanding this vibrant clean energy workforce here in Michigan with significant funding for Holtec Palisades nuclear power plant."

State funding totaling $150 million has also been allocated toward efforts to restart Palisades.

Holtec President and CEO Kris Singh in a statement called the funding announcement for the plant "a triumph for the United States in our collective pursuit of a clean and dependable energy future."

"The repowering of Palisades will restore safe, around-the-clock generation to hundreds of thousands of households, businesses and manufacturers," Singh said. "It also confers the environmental and public health benefits of emissions-free generation, hundreds of high-paying local jobs with a large union workforce, economic growth, and the social benefits of a strong community partner."

The plant, if brought back online, is expected to operate through at least 2051, the U.S. Department of Energy said in a release.

"Palisades is coming back," Governor Gretchen Whitmer said in a statement. "Once complete, Palisades will become the first successfully restarted nuclear power plant in American history, protecting 600 union jobs at the plant, 1,100 in the community, and access to clean, reliable power for 800,000 homes."

U.S. Rep. Bill Huizenga (R-Zeeland) in a statement said he was proud to have helped push for the project on the federal level.

"Holtec's historic repowering of the Palisades Nuclear Power Plant will provide safe, reliable, energy to meet southwest Michigan's growing needs, and it lays the groundwork for the first-of-their-kind small modular reactors to be placed at Palisades in the future."

Senate Minority Leader Aric Nesbitt (R-Porter Township) in a statement called the announcement a win for southwest Michigan and customers while also taking a dig at the governor and the renewable energy standard law Democrats enacted last fall.

"With the dark shadow of Gov. Whitmer's California-style Green New Deal signaling higher costs and a less reliable energy grid for our state's future, Michigan families need dependable power sources like Palisades to help alleviate energy prices and provide electricity when the sun doesn't shine and the wind doesn't blow," Nesbitt said. "I am happy to see the governor and her peers acknowledging the need to reopen this vital nuclear power plant as we brace for the predictable shortfalls of the extreme energy agenda forced through the Legislature."

Rep. Pauline Wendzel (R-Watervliet) in a statement said the funding announcement moves Michigan closer to being able to "secure out legacy as a global leader in technology, discovery, and innovation."

"Nuclear power has an essential role in our nation's energy future, and that future is going to be built right here in Michigan," Wendzel said. "We're going to make history, and once again, the world is going to follow America's, specifically Michigan's, lead."

Charlotte Jameson, chief policy officer for the Michigan Environmental Council, in a statement said the group does not have a position on nuclear power or federal funding for it. However, she said the group has expressed concerns with spending state monies on Palisades when there are other budget priorities.

"The state budget is an expression of our values and how we believe our taxpayer dollars should be invested to benefit the environment," Jameson said. "In this budget we feel that things like renewable energy; housing retrofits; multimodal transit funding; and funding to clean up contaminated sediment from major rivers speak to those values and should be prioritized over the Palisades investment."

LEO Budget Includes $100M For R&D Tax Credit

Posted: February 12, 2024 11:54 AM

A $100 million research and development tax credit was one of the highlights in the governor's proposed economic development budget released Wednesday.

Governor Gretchen Whitmer's Department of Labor and Economic Opportunity budget recommendation totaled $1.8 billion ($228 million General Fund). The budget proposal would be a 31.2 percent gross reduction (72.4 percent General Fund reduction).

The governor also provided for an additional $191 million in one-time spending ($131 million General Fund). This would include $60 million restricted funds for the Michigan Innovation Fund, $25 million General Fund for the Build Ready Sites Program to develop sites for future economic development projects, and a $20 million General Fund boost to the Going Pro Talent Fund program.

Additionally, the proposal notes the $500 million state restricted funds for the Strategic Outreach Attraction and Reserve Fund, which continues the program.

The Legislature previously earmarked up to $500 million to the SOAR Fund through the 2024-25 fiscal year.

Whitmer also recommended $150 million General Fund to continue funding energy projects targeting carbon-free energy sources.

The proposed LEO budget also included a $100 million research and development tax credit, which the governor mentioned in her State of the State address.

For the Business Attraction and Community Revitalization program, the governor recommended $100 million ($40.7 million General Fund) in ongoing spending. Another $20 million General Fund in one-time funding to bolster this funding was also recommended.

"These investments will create jobs and develop high-quality places that attract residents and spur economic growth," the budget documents said.

The proposed Going Pro one-time monies would be in addition to $54.8 million ($45.2 million General Fund) in ongoing spending for Going Pro. The one-time funding is intended to expand employer-based training.

Whitmer's proposal also included $50 million in restricted funds for the Housing and Community Development Program. The money would go toward downtown revitalization and building more affordable housing.

A total of $50 million in state restricted funds was proposed for ongoing funding to the Revitalization and Placemaking Program, which focuses on the rehabilitation of underutilized, blighted and historic structures.

Whitmer proposed $20 million in one-time General Fund for a Michigan marketing initiative intended to build on the Pure Michigan campaign to push for workforce attraction and labor retention along with drawing people to the state.

The governor recommended one-time funding of $20 million General Fund for talent solutions, which would be used for addressing current and future workforce needs.

The proposal also included funding for a pilot program related to legislation passed last year . A Community and Worker Economic Transition Fund pilot would receive $10 million General Fund under the governor's recommendations in a 2024 supplemental.

Last year, an Office of Worker and Community Economic Transition was signed by the governor as part of the renewable energy policy package (See Gongwer Michigan Report, November 28, 2023).

The governor recommended $5.9 million ($1.25 million General Fund) to expand vocational rehabilitation services through Michigan Rehabilitation Service and the Bureau of Services for Blind Persons. Focus HOPE would receive $1 million General Fund in one-time funding under the governor's budget proposal.

Whitmer recommended immigration and legal services spending of $8 million one-time General Fund for case management, transportation, legal services and language access supports.

Further one-time General Fund spending was recommended for global talent and retention ($4 million) and the Michigan Growth Office ($4 million).

The governor also recommended $5 million for the Arts and Cultural Program, $5 million for the Community and Neighborhood Initiative and $2.5 million for Rural Prosperity Grants, all one-time General Fund spending.

Sen. Mary Cavanagh (D-Redford Township), chair of the Senate Appropriations LEO and MEDC Subcommittee , said Republicans have suggested similar numbers to the $100 million research and development tax credit in the past. She added there are several economic tools available to the state to help spur small and larger business growth.

She also referenced questions raised by lawmakers during the budget presentation about housing and transportation needs statewide. Cavanagh said through further spending and the development of regional partnerships, those issues can be resolved.

"We could do more on housing, and I think you're going to see that in the Senate budget," Cavanagh said.

Cavanagh said she anticipates the LEO budget to look like what was passed out of the Senate last year.

"A little bit more toward total investments, so placemaking and making sure that we have a little bit more of grant funding to ideas rather than specific corporations or companies or even small businesses," Cavanagh said.

Senate Appropriations Committee Chair Sen. Sarah Anthony (D-Lansing) told reporters economic development will be looked at "through a progressive lens."

"We want to be attracting and retaining corporations, industries that are going to make Michigan a top 10 state, but we have to do so through a lens of making sure we're lifting up our communities, lifting up individuals, making sure that wages are competitive, that we're investing in areas that want large corporations in their communities," Anthony said. "We want to be mindful. Economic development just for economic development's sake is not the name of the game."

Sen. Mark Huizenga (R-Walker), minority vice chair of the Senate Appropriations LEO and MEDC Subcommittee , said one LEO budget item he is supportive of funding at a higher level is Going Pro. He said the program helps workers improve their skills and can help them gain or retain employment and helps employers in the process.

"It's an incredibly good program," Huizenga said. "We know it works well and continues to support people in retraining them. … That's a time-tested tool I could certainly get behind, and I hope we continue to do a lot more of that."

He also questioned the effectiveness of the SOAR program.

"States tend to chase shiny, pretty things," Huizenga said. "I think SOAR has actually not been as good as an outcome … it seems like a lot of the stuff was rushed through very quickly without really truly vetting what's going on."

Huizenga pointed to the downsizing of the Ford Motor Company's proposed electric vehicle plant in Marshall as an example (See Gongwer Michigan Report, November 21, 2023).

"I'd like to see us do more with incubators, in finding ways to encourage growth," Huizenga said, pointing to existing work being done at some of the state's public universities. "The spirit of entrepreneurism is one of the fundamental things about our state and our country, and we should probably be doing more to foster that."

Major Workers' Comp Bills In The Works, Biz Calls Proposal Extreme

Posted: February 5, 2024 12:21 PM

A battle over the state's workers' compensation law could take place this year between supporters of changes who say there are too many hurdles to obtaining benefits and the business community contending the proposed changes would upend the law and create significant cost increases.

Labor groups and lawyers who specialize in workers' compensation cases have been working on draft legislation for several months. They said the changes would reverse 2011 laws based on Supreme Court decisions in favor of employers that made it more difficult for claimants to obtain benefits.

The business community has countered that the proposed changes go too far and would instead upend the existing system while sharply increasing costs for businesses and lead to more costly litigation. They would also make Michigan an outlier nationally, with one business group labeling the draft language as extremely anti-business.

Robert MacDonald, a Flint attorney specializing in workers' compensation and disability cases, said the state's workers' compensation law passed in 1912 worked well for decades, with its highwater mark being changes signed by Governor George Romney in the 1960s.

Beginning in the 1980s, he said, the law has been changed in favor of employers.

Generally, injured Michigan workers receive 80 percent of the after-tax value of their average weekly wage, defined as the highest 39 of the previous 52 weeks of earnings prior to the date of their injury.

Benefits are capped at 90 percent of the state average weekly wage, currently $1,259, making the current cap $1,134 per week.

The law also considers post-injury earning capacity. If someone is injured at work and has the ability to do a lesser paying job, even if they cannot find that job, their compensation can be reduced by 80 percent of the average earnings for that position.

Supporters of proposed changes refer to the provision as the "phantom wage" and say it undermines the benefits for many claimants.

"This is not the safety net … that workers deserve to have," MacDonald said.

Workers' compensation as created was intended to strike a balance between employers and employees in finding a solution to cases, he said. For employers, this means preventing jury trials, having insurable risk, and providing for cost-contained medical benefits. Employees have a no-fault burden of proof for obtaining benefits.

Under the system, injured workers are eligible to receive weekly wage loss compensation, vocational rehabilitation and reasonable and necessary medical care, subject to cost containment rules.

Those who are injured on the job are not entitled to benefits for pain and suffering, loss of consortium by the worker or their spouse, or scarring or disfigurement.

MacDonald said with a Democratic Legislature and governor, there is a rare chance to address concerns he and others have with the existing workers compensation system.

"This is a historic opportunity to return fairness to the system," MacDonald said.

Wendy Block, senior vice president of business advocacy with the Michigan Chamber of Commerce, said the business community is very concerned about what could be in store under possible legislation.

"We've seen early drafts of the bills, and they are not only extremely costly … but also extremely anti-business," Block said.

Block said, at least in early drafts the Chamber has seen, there are three key concerns for the business community.

She said the proposed changes in the early drafts would expand who would qualify for workers' compensation benefits, increase benefits and create new opportunities for litigation.

These proposed changes, she said, would not just be a rollback of the 2011 codification of Supreme Court decisions, but would upend the balance that was struck in the original law a century ago.

"What we saw was, frankly, jaw-dropping," Block said. "They're swinging for the fences."

Block said Chamber members who have seen the early drafts have said the proposed changes could also sharply increase payouts per claim and would have significant negative effects on businesses.

"This is a significant part of doing business," Block said of workers' compensation insurance.

She added the changes would increase litigation and increase premiums for workers' compensation insurance, which all businesses are required by law to purchase.

Block said she would expect significant pushback from the business community if any legislation is put forward.

"Our message would be to tread carefully," Block said.

Todd Tennis, president of Capitol Services, Incorporated, in Lansing, a multiclient lobbying firm that represents some of the groups working on the draft legislation, said there has been a sharp increase in the number of injured workers who either cannot obtain benefit payments or have to jump through significant hoops under the current law to obtain and maintain them.

"We're trying to get it back to some balance," Tennis said.

Labor leaders, labor groups and workers' compensation attorneys have been working on the issue for more than a year with lawmakers, Tennis said, adding there have been conversations with carriers to see what feedback could be incorporated based on their concerns.

The Democratic chairs of the labor committees in each legislative chamber support proposed changes .

Rep. Jim Haadsma (D-Battle Creek), chair of the House Labor Committee , said his hope would be to see movement on the hypothetical wage issue legislatively this year.

Haadsma, a plaintiff-side workers' compensation attorney, said since the 2011 law changes, the workers' compensation law "has not fairly treated employees" and he would support changes when they are introduced.

"Right now, the system is out of whack," Haadsma said.

He said current law provides potential for significant reductions in benefits to injured workers .

Sen. John Cherry (D-Flint), chair of the Senate Labor Committee , said he has only become involved in the stakeholder conversations recently.

"I think some of the stuff that happened in 2011, I think probably the most egregious piece, like the 'phantom wage' issue, really has deviated from the general idea of having a workers' compensation insurance system," Cherry said. "It's particularly unfair, and we want to make sure that people have an incentive to work if they're physically able to, but I think the phantom wage piece even punishes people who are working, and it's not based in reality. So that's a huge, huge issue."

Workers' Disability Compensation Agency Director Jack Nolish said the law has a complex burden of proof. He said any proposed changes would amount to "a movement ultimately of money, and it goes from one side to the other," to either the employee or employer side of the equation.

Nolish said due to provisions in the law such as the post-injury wage earning capacity provision, "the net result of that is Michigan workers' compensation are paid less than the average injured worker in most of the states."

Another problem, Nolish said, is the compensation a person receives when they are injured becomes their compensation for the duration of their injury, which may be for life.

"With Michigan leading the pack and being among the lowest comp cost states, that's very important to businesses," Nolish said. "At the same time, that same piece of information is a problem to injured workers. We've had this decline over the last several years, and I think there's room for improvement."

Over time, workers' compensation cases have become more complex and expensive to litigate, Nolish said, and the outcomes are not as certain as they once were for workers.

Of the 18 states that report yearly to the Workers' Compensation Research Institute, Nolish said Michigan has the lowest costs per claim. Michigan also ranks among the lowest in medical payments per claim and in indemnity, or the weekly wage losses.

Michigan is also among the lowest in cost for benefit delivery, which includes litigation and attorney fees.

"However, the payment of medical care over the last 10 years has gone down substantially," Nolish said.

In 2012, there was about $1.2 billion in medical payments. As of 2021, this had dropped to less than $400 million, he said. The 2012 figure adjusted for inflation would be more than $1.5 billion in 2021.

Total claims reported per year have largely been consistent, Nolish said. Between 2012 and 2020, total claims peaked at 23,306 in 2014 and hit a low of 19,933 in 2016.

For 2021, with the coronavirus pandemic, there was a spike to 29,229, with more than 11,300 being COVID claims. Nolish said the numbers will likely return to the historical trend after the pandemic.

The number of contested cases has been trending downward since the 12,923 recorded in 2012 after the law changed. In 2021, there were 9,018 contested cases, up from a low of 7,953 in 2018.

"We're seeing people continuing to getting hurt, fewer and fewer cases being handled in a trial docket, which in some respects is a good thing, but it's also indicative of some of the difficulties in proceeding with litigation," Nolish said.

The ratio between workers winning contested cases and receiving full benefits in open awards has declined sharply since 2012, Nolish said.

"More recent numbers are suggesting there's three times as many denials as there are open awards," Nolish said.

The number of workers' compensation cases resolved by magistrates has also sharply fallen, from 10,058 in 2012 to 3,806 in 2021.

Workers are also less likely to receive lump-sum payments. The average settlement payment has remained steady over the past decade. In 2012, it was $61,961 over 7,446 settlements. In 2021, there were 2,845 settlements averaging $63,314.

The average 2012 settlement, adjusted for inflation, would be $75,238 in December 2021 dollars.

Group Launches Effort To Reverse Energy Siting Law

Posted: January 8, 2024 12:27 PM

A group seeking to undo recently passed laws moving the siting of large-scale wind and solar energy projects to the Public Service Commission formally announced its efforts last week, saying control for such decisions must be returned to locals.

After filing paperwork with the Bureau of Elections last month to create a new ballot committee, Citizens for Local Choice is beginning its effort to roll back the law. It submitted language to the Board of State Canvassers, which has a meeting scheduled on January 19.

The group is seeking to remove the siting authority for wind and solar energy projects as well as energy storage facilities granted under HB 5120, now PA 233 of 2023, and move siting back to local governments.

This would allow local ordinances governing setbacks, structure height, shadow flicker, and the amount of light and sound emitted by energy facilities to be enacted and enforced again. Local governments would also restore their ability to manage and approve proposed facilities within their jurisdiction.

"We refuse to sit on the sidelines as local control gets stripped from our communities," Norm Stephens, a Citizens for Local Choice committee member, said in a statement. "We are committed to this effort and believe we have a real chance to rightfully restore control back into the locals' hands."

If approved, the group would need to submit at least 356,958 valid voter signatures by May 29 to appear on the November 2024 ballot.

"This will no doubt be a tough battle, but it is a battle that thousands of Michigan voters and I are ready to take on," Stephens said.

The energy siting bills passed along party lines in November after a sharply partisan debate. They were signed weeks later.

Rep. Abraham Aiyash (D-Hamtramck), sponsor of what is now PA 233, said Thursday the landowners he has spoken to have thanked him and the Legislature for providing options for them to use their land how they want. Aiyash said residents are seeking more options for affordable renewable energy.

"Our legislation is extremely popular," Aiyash said.

The representative was not concerned about the proposal hurting the push for an increased state renewable energy standard.

As to any organized opposition to the group's ballot initiative, Aiyash said he hadn't heard anything.

"This is still new," he said.

Aiyash said the law explicitly prohibits eminent domain from being exercised in siting renewable energy projects and contains provisions for local involvement.

Michigan Townships Association Executive Director Neil Sheridan in a statement said the association has not been involved with the independent ballot initiative committee pushing the proposed measure, but MTA's members are supportive of repealing the law and returning siting to local governments.

"From its introduction, MTA and its members fought against the rushed legislative attack on local control and the ability of locally elected officials and residents to have the final say on where large-scale renewable energy facilities can locate in their borders," Sheridan said. "This is not – and has never been – about clean energy, but rather the essential need for local authority over local decisions that have far-reaching, long-lasting, and dramatic impacts in a community. We understand and echo the deeply felt concerns and continuing uncertainty about the effects of the new renewable energy law."

Tim Minotas with the Sierra Club Michigan Chapter said the new law "sets clear protections, local input, and community benefits" and that the siting law changes are needed to help the state meet the renewable energy standard it also passed last fall.

"What this law does is bring renewable projects in line with how we regulate and site other energy infrastructure. This ballot initiative campaign is a damaging and dangerous waste of time and resources," Minotas said. "It's too early to tell what kind of opposition they will receive, but I am sure that there will be. Michiganders want energy independence, and this is what this new law starts to achieve."

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