Distributed resources and distributed governance: Stakeholder participation in demand side management governance

The electric sector has undergone a remarkable transition over the past several decades, witnessing dramatic changes in the range of technologies used to provide power to consumers, the diversity of actors that have a stake in the sector, and the regulatory institutions that structure governance. In this paper, we argue that the centralized, formal, quasi-judicial regulatory approach traditionally used to regulate utilities among U.S. states is ill-suited to manage the emergent transition toward increased use of distributed resources such as demand-side management. Indeed, as the use of distributed resources has grown, states have begun to develop formal and informal ways to meaningfully engage market participants and other stakeholders in regulatory decision making. We call this trend “distributed governance,” embodying the idea that the new paradigm for electricity regulation is no longer centralized, but rather is distributed among state, market, and civic participants. In this paper, we examine distributed governance within the context of U.S. states’ demand-side management policies and programs. Using regulatory documents from Public Utility Commissions across the U.S., interviews with electric sector stakeholders in two states, and literature from public policy and management scholars, we develop propositions about distributed governance for distributed resources in the electric sector.