Why and how does participatory governance affect policy outcomes? Theory and evidence from the electric sector

In many policy arenas, decision makers have supplemented or even replaced traditional forms of bureaucratic decision making with more participatory approaches to governance. While theory suggests that participatory governance can have an instrumental effect on policy outcomes, there have been few efforts to systematically test these theories across multiple jurisdictions. This study asks whether and how participatory governance in electric sector regulation affects utilities' energy savings. Using a mixed-methods research design, this study develops hypotheses drawn from participatory governance theory, analyzes regulatory documents to operationalize a set of participatory governance variables, and uses a multilevel fixed effects model to test whether these participatory governance variables have an effect on electricity consumption by customers of 250 utilities across 42 states between 2000 and 2015. Model results show that deliberation among stakeholders has a significant decrease in electricity use by consumers, but that this effect must be realized over time as stakeholders gain experience with the deliberative process. To explore why deliberation produces this effect, the study presents qualitative evidence from Connecticut and Maryland, two states that have used participatory governance to regulate utilities' energy efficiency plans. Results suggest that information exchange among participants has a direct effect on utilities' energy efficiency plans. Participatory governance also contributes to a network of engaged stakeholders who can help hold utilities accountable for achieving their savings goals.