Published on EME 444: Global Energy Enterprise D7 (https://www.e-education.psu.edu/eme444)

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2 Public Politics

Introduction

Overview of Lesson 2

Nonmarket strategy includes all of the interesting and creative activities a stakeholder may perform in an effort to create a nonmarket environment that best serves it's interest. A firm may challenge a law that makes it expensive or difficult to do business or compete with others, for example. An individual may organize a boycott of products or services that violate the individual's interests or principles--hey, don't buy from them, they donate to cause/candidate that we disagree with! Protesters may march in the streets or write letters to elected officials. A firm may commission a study, with likely positive outcomes in a field related to its business, for distribution to the public and policy makers. These are all attempts to use forces outside of the market to influence what happens in the market--where the money changes hands!

In this lesson, we will look at strategies that apply to nonmarket action that takes place in government arenas. This is called public politics. In the following lesson, we will consider strategies for nonmarket action that takes place outside of public arenas, called private politics.

What will we learn?

By the end of this lesson, you should be able to...

  • explain the difference between public politics and private politics;
  • list and describe three general approaches to nonmarket strategy in government arenas;
  • demonstrate a range of specific strategies for nonmarket action in government arenas;
  • understand the role of lobbying and related nonmarket action in the overall performance of many firms and nonprofits;
  • complete all steps of a nonmarket issue analysis;
  • apply data and analytics to a standard renewable portfolio standard structure and related policy implications.

What is due for Lesson 2?

The table below provides an overview of the requirements for Lesson 2. For details, please see individual assignments.

Please refer to the Calendar in Canvas for specific time frames and due dates.

To Do List for Lesson 2
REQUIREMENT SUBMITTING YOUR WORK
Read Lesson 2 content and any additional assigned material Not submitted.
Weekly Activity 2 Yes—Complete Activity located in the Modules Tab in Canvas.
Case Study--work with others on your Team to prepare Case Study, following course guidelines Check Canvas calendar for all Case Study Due Dates. Plan your Team's work schedule accordingly.

Nonmarket Strategy

In the last lesson, we introduced a framework for the analysis of nonmarket issues.

  1. Define the issue. A specific one-dimensional issue.
  2. Collect background on issue. Document key terms and concepts, historical context, status, and timeline.
  3. Identify and profile stakeholders.  Name of stakeholder (firm, association, group, or individual), type of organization, and mission. Establish initial position on the issue and explain benefits stakeholder expects to realize from taking this position on this issue.
  4. Assess demand for and supply of non-market action across stakeholders. For each stakeholder, evaluate demand for nonmarket action (available substitutes, aggregate benefits, per capita benefits), and supply for nonmarket activities (effectiveness and cost of organizing).
  5. Predict amount of nonmarket action that a stakeholder can be expected to take. This is established by weighing the demand (benefits) of taking action with the supply (resources required) to take action.  The greater the benefits, the more likelihood of taking action. The greater the cost (and considering available resources), the less likelihood of taking action.

In part 1 of the RPS case study, we accomplished steps 1 and 2. At the the end of this lesson, the case study will continue through steps 3, 4, and 5. We will illustrate how the framework is used to present a summary of an issue and the positions of stakeholders. This information (the outcome of nonmarket analysis) is used as the basis for forming a nonmarket strategy.

mock photograph of street signs: lane ends, lead, follow
Lead, follow, or get out of the way!
Credit: Seeing Blue: A new strategy for business success. (2008, August). Knowledge Resource Centre, London Management Centre. Retrieved from Centre London Management [2]

Nonmarket Strategy

An effective business strategy is an integrated strategy that guides a firm’s actions in both market and nonmarket environments.

“When a firm chooses a market strategy, that strategy competes with the strategies of other participants in the market. Similarly, when a firm chooses a nonmarket strategy, that strategy competes with the strategies of others, including other firms, interest groups, and activists. That competition shapes the nonmarket environment and often the market environment as well. The nonmarket environment thus should be thought of as competitive, as is the market environment. Nonmarket competition focuses on specific issues, such as a bill to increase fuel economy standards, as well as on broader issues, such as open access to the Internet” (Baron, 2010, p. 36).

Market strategies position a firm to be competitive in the market place; to take advantage of market opportunities. Nonmarket strategies, on the other hand, work to shape the market environment in which a firm does business (the marketplace). For example, nonmarket strategies may affect regulation and public opinion.

In a market, firms compete with other firms. In the nonmarket environment, however, there are many other players. Motivated by self-interest or broader concerns, these other players may include individuals, activists, unions, advocacy groups, and non-government organizations (NGOs). We’ll refer to these nonmarket players collectively as interest groups.

Both firms and interests groups have nonmarket strategies. A nonmarket strategy addresses the issues on the agenda of a firm or interest group. The strategy has objectives and a plan of action that takes into account the strategies of all stakeholders engaged on an issue. This includes the strategies of those aligned with and opposed to the objectives of the firm or interest group developing the strategy.

So, the nonmarket environment includes both firms and interest groups competing for advantage on issues. When this competition takes place in the context of the institution of government, it is called public politics. When the competition between firms and other stakeholders takes place outside of the context of the institution of government, it is called private politics.

This lesson and the next lesson are about nonmarket strategy. In this lesson, we focus on public politics. The next lesson will address private politics.

Nonmarket Strategy Approaches for Public Politics

Minnesota legislative chambers. Many chairs and desks with a raised head seating area and a podium in the center of the room.
Legislative Chambers
Credit: Minnesota State House of Representatives Chamber [3] / J. Stephen Conn [4] / Creative Commons [5]

Objectives

The objectives of a nonmarket strategy accomplish two things: they focus attention on the issue and they help clarify alignment between stakeholders (those who are on the same side, who have the same or similar objectives). It is often helpful to specify a primary objective (stop this bill from getting passed!) but also a contingency objective (if it does pass, attempt to get, or avoid, some key wording). "For example, the domestic auto industry abandoned its primary objective of preventing higher fuel economy standards and adopted its contingent objective of obtaining flexibility in meeting the standards and measures to protect U.S. jobs" (Baron, 2010, p. 191).

Institutional Arena

Government arenas exist at many levels, including local, state, federal, and international, and they may take many different forms, from legislative to judicial and all the oversight agencies in between. Often, stakeholders may have some say in the arena where the issue will be addressed. Determining the desired arena can be a significant step in the development of a nonmarket strategy for resolving an issue.

Usually nonmarket issues are initiated by interest groups. For example, in the case of electric vehicles that are too quiet, the issue was raised by consumer complaints. And typically the stakeholder(s) that initiate an issue are the ones that determine where the issue will be addressed. But this is not always the case. Sometimes other stakeholders, including firms, may have an opportunity to drive the selection of an institutional arena.

Baron (2010, p. 191) cites an interesting example, summarized here:

Cemex, one of the world’s largest cement producers, sought to overrun an antidumping order in the institutional arenas of the International Trade Commission, the International Trade Administration, the U.S. Court of International Trade, the General Agreement on Tariffs and Trade, the North American Free Trade Agreement (NAFTA) and, finally, US Congress. (“Dumping” is when a company sells a product for less than its actual cost, or less than fair value. Antidumping rules impose duties on imports, or evoke similar regulation, intending to provide for fair trade.)

To Read Now

Since the election of Donald Trump as U.S. President, tarrifs have become a topic of discussion, though they have died down somewhat as of the summer of 2017. Regardless, this is a topic that that must ultimately be addressed through public politics.  Trump has repeatedly threatened tariffs on U.S. companies that manufacture goods outside of U.S. borders, e.g., a threat of a "border tax" [6] (a version of a tariff) on GM for building cars in Mexico that he made in January of 2017. It is likely that this will continue to be a contentious issue.

  • Please read "Is Trump's Tariff Plan Constitutional? [7]" by Rebecca M. Kysar in the New York Times (January 3, 2017) (Download the .pdf version here [8] if necessary.) This provides some insight into some of the intricacies of U.S. tariff policy. This is an opinion piece, but note the different institutional arenas mentioned in the article.

Nonmarket Strategies Approaches

There are three general approaches to nonmarket strategy in institutional (government) arenas: Representation, Majority Building, and Information Provision. Each type of strategy involves its own set of tactics, or activities, to execute the strategy.

  • Representation Strategies are strategies that build on the connection between elected officials and their constituents. The elected official seeks to represent the “will” of the voters and wishes to be reelected. In this type of strategy, the stakeholder (a firm or interest group) takes action to mobilize voters in support of candidates that are favorable to the stakeholder. A firm may establish a presence in a region or district—for example, by building a facility contributing to the local economy and creating jobs or by forming an alliance with another stakeholder with constituents in the area.
  • Majority Building Strategies are strategies that directly recruit the votes of public officeholders. This may be done through a variety of means, including vote trading between legislators (I’ll vote this way on A, if you’ll vote that way on B), stakeholder pledges of electoral support (voter mobilization and volunteers), other endorsements and advertisements, and campaign contributions.
  • Informational Strategies are strategies that use advanced data, insights, or understandings that a firm or an interest group has about an issue. For example, a report that shows hydraulic fracturing (“fracking”) for natural gas is costly to local municipalities may be used by fracking opponents to argue for a tax on fracking. The strategic use of information is a principal component in lobbying, legislative or regulatory proceedings, and public advocacy.

Strategies of Public Politics

Lobbying

When a stakeholder seeks to influence the vote of an elected official, it is called “lobbying.” The people who do it are called lobbyists or just “the lobby,” (e.g., “the coal lobby”). Lobbying is a major tool for both representation and informational strategies. In fact, the Center for Responsive Politics reports [9] that firms, labor unions, and other organizations spent over $3.1 billion (with a "b!") in 2016 to lobby Congress and federal agencies. This probably seems like a huge number, but spending was actually down slightly in 2016.  Regardless, every year since 2008 has had spending levels been above $3.1 billion!

Effective lobbying involves access to lawmakers or administrative officials, and, once you get there, strategic information. Two types of information are involved: technical and political. Technical information is about the issue—data and predictions. Political information pertains to the effects of the alternatives on constituents (voters) of the office holder. (If you pass this bill, prices will rise/fall, jobs will be gained/lost, the environment will be saved/damaged).

Either way, to be effective, the information needs to be credible. To establish credibility, the officeholder may seek to verify the information with a third party (ideally by an opposing interest) or seek information from a source that is widely trusted by constituents. When data is backed by studies or data, it is more effective.

Of course, it is “both allowed and commonplace” for stakeholders to use information in a way that advocates their side of an issue! However, there are times when it would be immoral and possibly illegal to withhold information or make false claims. Responsible stakeholders remain highly mindful of this line.

Electoral Support

Electoral support activities focus on providing resources that help candidates during elections. For example, endorsements, volunteer workers, help with get-out-the-vote campaigns, campaign contributions, and funding for political advertisements (for and against candidates) are all electoral support activities. Activities of this nature are widely used by unions and many interest groups but less so by firms, which tend to spend more on lobbying.

A major Supreme Court ruling in 2010 has worked to change this, however, at least for Federal Elections. As reported by the Center for Responsive Politics [10]:

In a 5-4 ruling in the case of Citizens United v. Federal Election Commission, the court overturned a ban on corporate and union involvement in federal elections that had been in effect since the early 1900s. The ruling allows corporations, unions and other organizations to spend unlimited sums from their own treasuries to fund political advertisements advocating the election (or defeat) of specific federal candidates.

The money can only be used for independent expenditures -- not direct contributions to the candidates' campaigns. And whatever ads are produced can't be coordinated with the candidates -- though policing that is not an easy thing to do.

Months before the election, numerous groups on the left and right announced intentions to raise millions of dollars to run independent campaigns to help elect their preferred candidates. Some formed new "super PACs" whose donors were fully disclosed, but many corporations and wealthy individuals funneled the money through non-profit front groups that kept the identity of donors secret. Attempts by Democrats in Congress to require disclosure of those hidden donations were defeated, so the sources of that money may never be known.

By election day, outside groups reported raising and spending nearly $300 million -- more than 40 percent of which came from undisclosed sources. That unprecedented surge of outside money -- which favored conservative candidates by a 2:1 margin -- helped to topple Democratic incumbents all across the country and bring about the biggest GOP sweep on Capitol Hill since 1948.

Not required, but if you are interested, see OpenSecrets.org [11] for more detail about PACs and current data related to PAC campaign contributions, broken down by sector, industry, and unique PAC.

Grassroots

Grassroot campaigns are based on the connection between constituents and their elected officials and may be used as part of an informational or representation strategy. Grassroots activities include letter writing campaigns (e-mail, post cards, letters), phone calling and grassroots lobbying (where individual stakeholders participate in lobbying efforts).

The effectiveness of grassroots activities depends largely on the supply-side of our analysis framework—numbers, coverage, resources and cost of organizing. The recent advent of low-cost, widely distributed mobile technology, however, has changed this equation dramatically. With no paper or postage, mass e-mail communications and social media campaigns are fast and without significant cost. With online blogs and surveys, information collection and dissemination is rapid and cheap. With social media, widespread organizing and information sharing is instantaneous and free.

Barack Obama’s 2008 campaign is widely viewed as revolutionizing presidential digital organization in the U.S., and he utilized social media with great success in 2012 as well. The success of Donald Trump's 2016 campaign was made possible by social media, particularly through Twitter communication and news sharing on Facebook. Grassroots organization on social media played a major role in the surprising success of the "Brexit" campaign in 2016 that resulted in Britain's decision to exit the European Union. Researchers from Oxford University determined that [12]:

...the campaign to leave had routinely outmuscled its rival, with more vocal and active supporters across almost all social media platforms. This has led to the activation of a greater number of Leave supporters at grassroots level and enabled them to fully dominate platforms like Facebook, Twitter and Instagram, influencing swathes (sic) of undecided voters...

Social media famously played a starring role [13] in fomenting and publicizing the "Arab Spring" that began in 2010 and sent shockwaves through many Middle-Eastern countries.

From Obama's and Trump's top-down approach to the (mostly) bottom-up organizing of the “Arab Spring” and Brexit, technology has unleashed nonmarket forces as never seen before!

Coalition Building

This component of a nonmarket strategy involves forging a coalition with other stakeholders. Sometimes these coalitions may be longstanding and formalized, like trade associations or a Chamber of Commerce. Other times they may be ad hoc, joining together for a particular issue. Even with a coalition, however, the alignment of the stakeholders may not be ideal and may require negotiation. A well planned coalition can increase the effectiveness of the individual stakeholders on an issue by combining their numbers and resources.

Hindi women sitting at a table. One of the women is talking into a microphone.
Policy forum to demand legislation for Hindus' rights in Islamabad
Credit: Pakistan Hindu Post [14]

Testimony

Stakeholders may testify before regulatory agencies, congressional committees, administrative agencies, and courts. This testimony is “important not only because the information presented can affect regulatory decisions, but also because it creates a record that may serve as a basis for judicial review” (Baron, 2010, p. 236).

In the public processes of regulatory agencies, stakeholders are given an opportunity to comment or otherwise contribute information to the process. The Pennsylvania Public Utility Commission (PUC) for example routinely “asks for comments” on policy. In The PUC Rate Making Process and the Role of Consumers [15], the PUC explains the many ways interested parties are invited to provide input into the rate making process:

Individual ratepayers may become formal parties by filling out a formal complaint form. Ratepayers may speak for themselves, or an attorney may represent individual ratepayers or groups of ratepayers. Consumers also can have their say informally by writing or calling the PUC or completing the objection/comment form. Consumers also may testify at public input hearings. By providing testimony, consumers place their views in the official record on the case. Public input hearings are conducted by the ALJ [Administrative Law Judge] in the utility’s service territory. Consumer testimony becomes part of the record on which the PUC will base its decision.

The right to comment on public sector action is fundamental to rulemaking at local, state, and federal levels, and allows all citizens to engage in public politics. For example, all regulations issued by federal agencies must be made available for public comment [16] for at least 30 days (except under extenuating circumstances), and all substantive comments are to reviewed before the the final reguation is published.

Public Advocacy

Public advocacy is communication directly to the public conveying a particular position on an issue. How a message is framed can be important. For example, “cap and trade,”dubbed by opponents as “cap and tax,” may be better served by the alternative “cap and dividend.” The "Clean Coal" campaign is a strong example of a carefully framed and well-funded message targeted directly at the general public. Firms, politicians, and interest groups can and often do engage in public advocacy. Perhaps the most prevalant and common example now is the way President Trump uses Twitter to reach out directly to the general public, frequently framing issues ("dangerous immigrants," "job-killing taxes," etc.). At no time in the history of the U.S. has a U.S. President engaged in so much public advocacy.

Judicial Actions

Judicial actions are cases where a stakeholder is either a defendant or an initiator of legal action as part of a nonmarket strategy. The purpose of these cases may be to enforce or protect rights, obtain damages, or address unfair competitive practices. Lawsuits are often very costly, but rewards can be high, too. Judicial strategies may be used in courts, governed by statutory and common law, and in regulatory and administrative agencies, which are governed by administrative law.

In a landmark ruling in June 2011, for example, the Supreme Court ruled [17] that climate change regulation is the business of the federal government (the Environmental Protection Agency, or EPA) and barred states from using public nuisance laws to try to force major utilities to cut greenhouse gas emissions from power plants. In doing so, the "high court sided with five large utilities in a suit brought by several states and three nonprofit land trusts over the facilities' emissions. The utilities--American Electric Power Co., Southern Company, Xcel Energy, Cinergy Corp., and the Tennessee Valley Authority--together release about 650 million tons of CO2 per year. That's a quarter of the CO2 emissions from the U.S. electricity-generating sector."  

Ironically, though the utilities were technically victorious in this institutional arena in the abovementioned case, this ruling provided the authority for the Obama Administration's Clean Power Plan (CPP) [18], which is a regulation propagated by the EPA that is projected to reduce the carbon pollution from U.S. power plants 32% below 2005 levels by 2030 [19].  The CPP was a nonmarket public political action that, if it were to be revived and come to fruition, would likely have a significant impact on the national power market for the foreseeable future. The CPP's implementation was blocked by a 5-to-4 margin in the U.S. Supreme Court in February of 2016, and is currently awaiting judgment [20] (as of August 2017) in the District of Columbia Circuit of the U.S. Court of Appeals. The U.S. EPA is currently reviewing [21] the CPP (this is outside of the judicial arena, of course).

This authority granted by the Supreme Court has also played a prominent role in the U.S.'s negotiations in, and ultimate adoption of, the 2015 Paris Agreement [22], which will have far-reaching impacts on energy markets worldwide.  In fact, the Paris agreement (which is also not supported by the Trump Administration) also took place in an international institutional arena (though not judicial), under the auspices of the United Nation's Framework Convention on Climate Change (UNFCC) [23].

Shareholder Advocacy

Interest groups may use a firm’s annual shareholders meeting as an opportunity to question the company in a venue where the exchange will be reported to the public. (This would be considered private politics, because it does not take place in a government institutions.) Taking these actions an additional step, however, an interest group that is a shareholder may make a more formal filing with the Securities and Exchange Commission (SEC). This would be a move to public politics and is called a shareholder resolution.

To Read Now

  • Visit The Forum for Sustainable and Responsible Investing [24] and read "Shareholder Resolutions". (If you have a few minutes, explore this site more.)
  • Read a summary of proxy materials [25] by Broadridge, an investment consulting firm. (Also note the description of proxy statements.)

Organizing for Nonmarket Effectiveness

To be effective in government arenas, firms (and other organizations) need to stay "in the know" about what's going on--trends, information, changes, priorities, people, and personalities. They must stay in close touch with the political winds around topics of concern to the organization. Baron explains how this may be done:

Firms that expect to be involved in issues addressed in government arenas must anticipate rather than simply react to developments. Consequently, they need to organize and be prepared for action. It is essential to monitor issues, and for many firms this means full-time representation in Washington and in the capitals of key states. For other firms, associations can be a cost effective means of providing intelligence, although this may not be sufficient if the firm’s interests differ from those the association represents. Most large firms also have a government affairs department that provides expertise and monitors the development of issues. A department may include lawyers, communications experts, former government officials, lobbyists, and analysts.

Washington offices serve as the eyes and ears of firms. They provide information on developing issues and are a locus of expertise about issues, institutions, and office holders. Because nonmarket issues are often episodic in nature, many firms on occasion engage the services of political consulting firms, Washington law firms, or public relations firms. Similarly, lobbyists may be hired for a specific issue. The size of a firm’s permanent staff thus is determined relative to the cost and effectiveness of outside alternatives.

Because lobbying is the centerpiece of most firms’ interactions with government, most employ lobbyists who are either political professional or experienced managers responsible for presenting the firm’s concerns to government officials. Their responsibilities typically include maintaining relationships with members of Congress, executive branch officials, and government agencies. Access is a necessary condition for lobbying, so many firms make a practice of maintaining contact with those members of Congress in whose districts they have their operations and with the committees that regularly deal with issues on the nonmarket agendas. Firms also provide training for their managers who are involved in nonmarket issues. That training often emphasizes sensitivity to the public reaction to the firm’s activities and the development of personal skills for participating effectively in government arenas.

Source: Baron, p. 239

 

RPS Case Study, Part 2

The following Case Study is written by the course author. The framework of this Case Study reflects actual Pennsylvania policy and data. All information about stakeholders, especially assessments related to the likelihood of participation in nonmarket action and the strategy that may or may not be evoked, is the author's opinion and presented in a manner to best demonstrate the lesson content of this course. This Case Study does not necessarily represent the actual position or strategy held or planned by any named stakeholder.

Case Study, Continued...

In the first part of this Case Study, we identified the issue and provided background, including a full description of the principles of Renewable Portfolio Standards (RPS) policy. With this groundwork, we are now prepared to consider the issue from the viewpoint of a wide range of stakeholders. Using an orderly format and presentation, we continue our nonmarket analysis with an examination of each stakeholder, including a description of the stakeholder, initial position, and an assessment of all factors related to the demand for and supply of nonmarket action.

We will use the following scales, as suggested by Baron (2010, p. 169).

Aggregate and Per Capita benefits: small, moderate, considerable, large, substantial

Numbers: few, small, considerable, large, substantial

Coverage: little, extensive, complete

Resources: limited, small, moderate, large, huge

Cost of Organizing: very low, low, moderate, high, very high

Prediction: limited, little, moderate, large

A couple of notes before you read through this: First, when analyzing the substitutes for nonmarket action, make sure to consider potential substitutes to the position that the stakeholder takes, and whether or not they are within the stakeholder's power to impact. Substitutes can change from stakeholder to stakeholder.  So if a stakeholder is opposed to the RPS, consider substitutes that would have the same or similar effect as the RPS policy not passing, and is an action they can influence.  If a stakeholder supports the RPS, consider substitute actions that would have the same or similar result as the RPS passing. Effectively you ask yourself: "Does the stakeholder have any other options that could take the place of the outcome that they want and can they influence that outcome?"

Also, when analyzing the coverage of the stakeholder, there are a few important considerations. First, consider the scale of the nonmarket issue. In our example here, the RPS is a state law, so you should consider how much of the State of Pennsylvania is covered by the stakeholder. For national issues, you should scale up accordingly. Second, be careful when estimating the extent of coverage. For example, a non-profit having an office in every U.S. state does not necessarily result in complete, or even extensive coverage of a national issue. You should think about whether or not each office oversees membership in every part of the state, whether it reach dozens or tens of thousands of members, and so forth.

Finally, keep in mind that prediction of nonmarket action is not an exact science, but predictions must be justifiable. The goal is to analyze as much relevant supply and demand information as possible and make a prediction based on that information. A good analysis will take all factors into consideration and have a strong, logical justification based on the available information.

Stakeholders

Mid-Atlantic Renewable Energy Association (MAREA) [26]

“a nonprofit organization, dedicated to informing and educating the public on renewable energy production, energy efficiency, and sustainable living through meetings, workshops, educational materials, and energy fairs.” Position: SUPPORTS

  • Substitutes: Many MAREA members, both individuals and businesses, have a financial interest in solar. But all members share a primary commitment to principles related to sustainability, including efficiency, agriculture, and other technologies. Advances in electricity pricing (“time of use”) that would benefit solar and encourage conservation would be somewhat of a substitute. TOU Pricing
  • Aggregate: Benefits are large for MAREA. The solar industry has a large and important presence at MAREA’s annual energy festival. Solar events of all types are highly attended.
  • Per Capita: On average, benefits are small for individual MAREA members, many of whom are not in the solar business and do not yet own their own solar electric system.
  • Numbers: Typically, 6,000 to 10,000 attend the annual PA Renewable Energy Festival. MAREA doesn’t release data regarding the number of members or extent of its e-mail circulation. considerable
  • Coverage: Mostly eastern PA, some in central and western PA, some out of state. extensive
  • Resources: Limited finances. Other than a few paid services, MAREA is managed by all volunteers. limited
  • Cost of Organizing: MAREA has a strong e-mail list, active website, and established social media presence (Facebook and Twitter), and face-to-face contact at monthly meetings and with large audience at annual energy festival. Cost of Organizing is low.
  • Predicted amount of nonmarket action: Aggregate benefits to organization are high and cost of organizing is low, but per capita benefits are small and resources are limited. moderate

Pennsylvania division of Solar Energy Industries Association (PA-SEIA) [27]

“organization of manufacturers, developers, contractors, installers, architects, engineers, consultants and other industry professionals dedicated to advancing the interests of solar energy and to developing a strong local PA industry offering high quality installation and professional services to business and residential customers in the region we serve.” Also, at the time it published a public blog for the PA division of MSEIA [28] Position: SUPPORTS

  • Substitutes: For this industry association, there is no good substitute for action that would stabilize AEC prices. Because of the poor AEC market conditions, many solar projects are on hold or canceled across the state.
  • Aggregate: Benefits are substantial for PA-SEIA. Without this bill passing, or similar legislative action, solar businesses will flee PA for more favorable business environments. These businesses are the PA-SEIA membership.
  • Per Capita: Benefits are substantial for individual PA-SEIA members. Passing this bill will restore markets and demand for solar installations. Many would say this bill is necessary to stay in the business in PA, at least for the next few years.
  • Numbers: As of 2011, the regional SEIA website [29] listed 75 member businesses in PA. This represents about 15% of the total number of installers on the PA DEP’s Approved Installer List. small
  • Coverage: Majority are in eastern PA, some in central PA, very few in western PA. little
  • Resources: Organization has highly qualified lobbyist available, but resources must be covered by member dues. small
  • Cost of Organizing: Members are available electronically. Resources needed to administer website, manage e-mail lists, and develop messaging. Limited presence on social media. moderate
  • Amount of Nonmarket Action: Stakes are high but PA-SEIA resources are limited. moderate

Owners of Small Solar Electric Systems in PA

Individuals, typically homeowners, with small scale solar installations (<15 kW) in PA used to offset personal usage. Position: SUPPORT

  • Substitutes: For most, AEC income is an essential component in recovering cost of investment. Advances in electricity pricing (“time of use” or TOU) that would be a weak substitute. They may also be able to sell their AECs into other regional markets.
  • Aggregate: Benefits are large, directly financial. This bill will increase the demand for AECs (higher percentages) and reduce the supply (close PA borders), increasing PA AEC prices.
  • Per Capita: Benefits are large, directly financial. As described above.
  • Numbers: As of July 2011, there were 4,028 solar generators (capacity less than 15 kW) located in PA, registered with the PA AEPS. large
  • Coverage: Statewide complete
  • Resources: Because of capital investment involved for solar electric installation, presumably individuals in this group are reasonably well resourced. moderate
  • Cost of Organizing: Currently, contact info for homeowners with solar electric installations is unavailable. Must be reached through other organizations or broad media. high.
  • Amount of nonmarket action predicted: Stakes are high, yet very difficult to reach and inform this group. limited

Owners of “Larger” Solar Electric System in PA

Owners of solar electric installations in PA with capacity greater than 15 kW, typically small businesses or institutions. In PA, as of July 2011, includes facilities up to 3.5 MW. Position: SUPPORT

  • Substitutes: For most, AEC income was a critical component in securing financing. May be able to sell AECs elsewhere, but not a strong substitute.
  • Aggregate: Benefits are substantial, directly financial. This bill will increase the demand for AECs (higher percentages) and reduce the supply (close PA borders), increasing PA AEC prices.
  • Per Capita: Benefits are substantial, directly financial. Same as described above.
  • Numbers: As of July 2011, there are 530 solar generators located in PA, with capacity greater than 15 kW, registered with the PA AEPS. small
  • Coverage: Mostly eastern PA, some in central and western PA. extensive
  • Resources: Mostly well-resourced small businesses and institutions, but small in number. limited
  • Cost of Organizing: high. Currently, contact info is unavailable or difficult to ascertain. Must be reached through other organizations or broad media.
  • Amount of nonmarket action predicted: Again, difficulty reaching and informing this group though stakes are high. As an organized group, limited likelihood of action. Because of the commercial nature of many of these projects,however, some owners may be aware and act independently. So overall, little.

Owners of Small Solar Electric System (not in PA, in PJM)

Individuals, typically homeowners, with small scale solar installations (<15 kW) used to offset personal usage. Located outside of PA, but still within PJM territory and currently able to sell RECs into PA market. Position: OPPOSE

  • Substitutes: Sell RECs elsewhere.
  • Aggregate: Benefits are small. If bill doesn't pass, REC values stay low. If bill does pass, PA borders are closed. Either way, no significant benefit.
  • Per Capita: Benefits are moderate, for same reason.
  • Numbers: About 1,300 (>15kW) not in PA currently registered with AEPS. considerable
  • Coverage: Outside of PA, otherwise unknown. little
  • Resources: Because of capital investment involved for solar electric installation, presumably individuals in this group are reasonably well resourced. moderate
  • Cost of Organizing: Very high. Currently, contact info is unavailable or difficult to ascertain. Presumably located in multiple states. Must be reached through other organizations or broad media. very high
  • Amount of nonmarket action predicted: Limited, because of small benefits, difficulty reaching and informing this group and available substitute.

Owners of “Larger” Solar Electric System (not in PA, in PJM)

Owners of solar electric installations not in PA with capacity greater than 15 kW, typically small businesses or institutions. As of July 2011, includes facilities up to 10 MW. Located outside of PA, but still within PJM territory and currently able to sell RECs into PA market. Position: OPPOSE

  • Substitutes: For some, AEC income based on PA markets was an important component in securing financing. Selling into other markets may be an acceptable substitution.
  • Aggregate: Benefits of opposing the bill are small. If the bill doesn’t pass, AEC prices are expected to stay very low for near term (3 years). If bill does pass, borders will be “closed,” and will have no access to market at all.
  • Per Capita: Benefits are small. Same as for aggregate.
  • Numbers: As of July 2011, there were 102 solar generators located outside of PA, with capacity greater than 15 kW, registered with the PA AEPS. small
  • Coverage: Outside of PA, otherwise unknown. little
  • Resources: Mostly well-resourced small businesses and institutions, but small in number. small
  • Cost of Organizing: Currently, contact info is unavailable or difficult to ascertain. Must be reached through other organizations or broad media. very high
  • Amount of nonmarket action predicted: Difficult and costly to organize with small benefits per capita and in the aggregate. limited

Solar Installers

Any person or business that installs solar electric systems in Pennsylvania. Position: SUPPORT

  • Substitutes: For most customers, AEC income is critical to obtain financing and/or cost justify the investment. For installers, if solar business dries up, option is to close up or relocate. No acceptable substitute for what AEC prices do for market.
  • Aggregate: Benefits are substantial, directly financial (increased customer activity)
  • Per Capita: Benefits are substantial, directly financial (increased customer activity)
  • Numbers: As of July 2011, the DEP list of Approved Photovoltaic Installers [30] included 629 names, 462 located in PA. small
  • Coverage: All PA and some other states. complete
  • Resources: Not formally organized, includes many small business, new start-ups. moderate
  • Cost of Organizing: Full contact info is published, but difficult to work with. Hard to get installers attention with e-mail only; other contact (phone, mail) are resource intensive. moderate
  • Amount of nonmarket action predicted: High, benefits are high per capita and across group, readily identified group, cost of organizing moderate but appears worth it, no good substitute.

PennFuture [31]

A nonprofit organization that “enforces environmental laws and advocates for the transformation of public policy, public opinion and the marketplace to restore and protect the environment and safeguard public health. PennFuture advances effective solutions for the problems of pollution, sprawl and global warming; mobilizes citizens; crafts compelling communications; and provides excellent legal services and policy analysis.” Position: SUPPORT

  • Substitutes: Many members have a financial interest in solar. But all members share a primary commitment to principles related to the environment, including water, air, climate, and other natural resources (natural gas). For solar specifically, however, no direct substitute. Progress on other environmental issues would be suitable substitute.
  • Aggregate: Benefits are moderate for PennFuture, no direct benefit to group but of significant benefit to some members.
  • Per Capita: Overall, benefits are moderate for individual PennFuture members, because of financial benefit to some and environmental benefit for all.
  • Numbers: Data are unavailable. PennFuture website reports, “The Philadelphia Inquirer called PennFuture "Pennsylvania's leading environmental advocacy organization." large
  • Coverage: Statewide complete
  • Resources: PennFuture is a well funded non-profit, based on donations. Group maintains paid staff of policy analysts. large
  • Cost of Organizing: PennFuture has an active website and holds many well-attended public events. Cost of Organizing is low.
  • Amount of nonmarket action predicted: High, benefits are medium for group and per capita, and group is concerned with additional issues, but resources are large and cost of organizing is low.

Pennsylvania Coal Association [32] (Now called the Pennsylvania Coal Alliance)

A “trade organization representing surface and underground coal operators that produce bituminous coal mined in the Commonwealth. In addition, PCA represents companies whose livelihood depends in whole or in part on a robust coal industry by providing essential services to the coal industry, ranging from engineering and consulting to financial, insurance and the sale of mining equipment.”

The PCA has successfully opposed similar initiatives in the past [33], citing rising electricity prices for consumers. Solar, of course, is a competitive energy source. Currently, coal is used to generate almost half [34] of the electricity in PA. Solar is less than 0.05%. Position: OPPOSE

  • Substitutes: Any other issue involving alternative fuel sources or industry regulation.
  • Aggregate: Overall, benefits are moderate. At this point, due to relative scale, solar poses no real threat but issue carries weight on principle with organization and its members.
  • Per Capita: Benefits of defeating this bill are small to individual PCA members.
  • Numbers: At the time, about 150 members. few
  • Coverage: Statewide, but mostly western PA extensive
  • Resources: Resources of prominent members of regional coal industry. huge
  • Cost of Organizing: Well organized, established channels, experienced. very low
  • Amount of nonmarket action predicted: Large, benefits are small to moderate, but resources are huge and cost of organizing is very low.

Rate Payers

Any individual or business in PA that pays for electricity. Position: OPPOSE

For ratepayers who oppose this bill, the benefits are avoiding possible small increase in electricity prices.

  • Substitutes: Energy efficiency and conservation, but not perceived as a viable replacement for low electricity prices.
  • Aggregate: Overall, benefits of opposing the bill are small
  • Per Capita: For individual ratepayer, benefits of opposing the bill are small. But for some, principle of "less government" is important, and bills of this nature have symbolic importance. moderate
  • Numbers: 4,970,057 Residential + 680,045 Commercial/Industrial = 5,650,102 Total Customers [35](not all are opposed—unclear how many support/oppose/have no opinion) substantial
  • Coverage: Statewide complete
  • Resources: Resources of all businesses and individuals that pay for electricity in PA and oppose this bill. huge
  • Cost of Organizing: No organization or focused medium for reaching all rate payers. very high
  • Amount of nonmarket action predicted: Limited, benefits are small per capita and for group, and cost of organizing is very high. On symbolic grounds, however, some possibility of action.

Rate Payers

Any individual or business in PA that pays for electricity. Position: SUPPORT

For ratepayers who support this bill, the benefits are reduced reliance on fossil fuels and energy imports.

  • Substitutes: The opportunity to purchase electricity from “green” generators would be a good substitute.
  • Aggregate: Overall, benefits are small.
  • Per Capita: Unless you are a ratepayer with an installed solar electric system, benefits are indirect (environmental, principled) and small.
  • Numbers: 4,970,057 Residential + 680,045 Commercial/Industrial = 5,650,102 Total Customers [35] in 2011 (not all are supporters—unclear how many support/oppose/have no opinion) substantial
  • Coverage: Statewide complete
  • Resources: Resources of all businesses and individuals that pay for electricity in PA and support this bill. huge
  • Cost of Organizing: No organization or focused medium for reaching all rate payers. very high
  • Amount of nonmarket action predicted: Limited, benefits are small per capita and for group, substitutes exist and cost of organizing is very high.

Pennsylvania Chamber of Business and Industry [36]

The “largest broad-based business association in Pennsylvania. Thousands of members throughout the Commonwealth employ greater than 50 percent of Pennsylvania’s private workforce. Headquartered in Harrisburg, the PA Chamber serves as the frontline advocate for business on Capitol Hill by influencing the legislative, regulatory, and judicial branches of state government. In 1995, the Pennsylvania Chamber of Business and Industry became one of only five state chambers in the nation to be accredited by the U.S. Chamber of Commerce for meeting the highest standards of performance and effectiveness.”

The PCA has successfully opposed similar (broader) initiatives in the past [37], stating “the legislation would destroy Pennsylvania’s historic energy strengths, including coal, nuclear (a CO2-free energy), and one of the Commonwealth’s most promising developing industries – natural gas“ and “consumers would be forced into paying for more costly energy sources.” Position: OPPOSE

  • Substitutes: Other issues involving regulation and overhead for businesses in PA. However, particular sensitivity to issues related to energy costs.
  • Aggregate: The benefits to the Pennsylvania Chamber of Commerce and its members of opposing this bill are: avoiding small possible increase in electricity prices and avoiding competition from alternative energy sources. But, on principle, this issue rates high. Overall, benefits are moderate.
  • Per Capita: Benefit is avoiding possible small increases in electricity prices. small.
  • Numbers: Exact data unavailable, but this from the Chamber's Web site [38], “The Pennsylvania Chamber of Business and Industry is the largest broad-based business association in Pennsylvania. Thousands of members throughout the Commonwealth employ greater than 50 percent of Pennsylvania’s private workforce.” large
  • Coverage: Statewide complete
  • Resources: Resources of all Chamber members. huge
  • Cost of Organizing: Experienced, structured, well organized. very low
  • Amount of nonmarket action predicted: Well-funded and experienced operation ready to roll, though direct benefits are small to moderate, but on principle, issue is significant. large

Framework

As a final step to our Nonmarket Analysis, we build a table, as shown below, to present a summary of our findings. This table is the Nonmarket Analysis Summary Framework. Ta da!!

ISSUE: Pass HB 1580 to Accelerate Alternative Energy Portfolio Standard Schedule for Solar
Supporting Stakeholders
  Demand Side Supply Side Prediction
Stakeholders - SUPPORTING Benefits from Supporting HB 1580 Ability to Generate Nonmarket Action Amount of Nonmarket Action
Substitutes Aggregate Per Capita Effectiveness Cost of Organizing
Numbers Coverage Resources
MAREA TOU elec prices large small considerable (~8,000) extensive limited low moderate
PA-SEIA none substantial substantial small (~75) little small moderate moderate
Small System Owners (in PA) TOU elec prices, sell RECs elsewhere large large large (4,000) complete moderate high limited
"Larger" System Owners (in PA) sell RECs elsewhere substantial substantial small (530) extensive limited high little
Solar installers none substantial substantial small (629) complete moderate moderate high
PennFuture other environmental issues (gas) moderate moderate large complete large low high
Ratepayers (supporting) buy green generation small small substantial complete huge very high limited

 

ISSUE: Pass HB 1580 to Accelerate Alternative Energy Portfolio Standard Schedule for Solar
Opposing Stakeholders
Stakeholders - OPPOSING Benefits from Opposing HB 1580 Ability to Generate Nonmarket Action Amount of Nonmarket Action
Substitutes Aggregate Per Capita Effectiveness Cost of Organizing
Numbers Coverage Resources
Pennsylvania Coal Association other renewable energy issues moderate small few (150) extensive huge very low large
Ratepayers (opposing) none small moderate substantial complete huge very high limited
PA Chamber of Business and Industry other regulation issues moderate small large complete huge very low large
Small System Owners (not in PA) sell RECs elsewhere small moderate considerable (~1,300) little moderate very high limited
"Larger" System Owners (not in PA) sell RECs elsewhere small small small (~100) little small very high limited

Lesson 2 Assignment

Weekly Activity 2

Please review Canvas calendar for all due dates related to your Nonmarket Analysis Case Study.

Deliverable

Complete "Weekly Activity 2," located in the "Weekly Activities" folder under the Modules tab in Canvas. The activity may include a variety of question types, such as multiple choice, multiple select, ordering, matching, true/false and "essay" (in some cases these require independent research and may be quantitative). Be sure to read each question carefully.

Unless specifically instructed otherwise, the answers to all questions come from the material presented in the course lesson. Do NOT go "googling around" to find an answer. To complete the Activity successfully, you will need to read the lesson, and all assigned readings, fully and carefully.

Each week a few questions may involve research beyond the material presented in the course lesson. This "research" requirement will be made clear in the question instructions. Be sure to allow yourself time for this! You will be graded on the correctness and quality of your answers. Make your answers as orderly and clear as possible. Help me understand what you are thinking and include data where relevant. Remember, numbers should ALWAYS be accompanied by units of measure (not "300" but "300 kW"). You must provide ALL calculations/equations to receive full credit - try to "talk me through" how you did the analysis.

This Activity is to be done individually and is to represent YOUR OWN WORK. (See Academic Integrity and Research Ethics [39] for a full description of the College's policy related to Academic Integrity and penalties for violation.)

The Activity is not timed, but does close at 11:59 pm EST on the due date as shown in Canvas.

If you have questions about the assignment, please post them to the "Questions about EME 444?" Discussion Forum. I am happy to provide clarification and guidance to help you understand the material and questions (really!). Of course, it is best to ask early.

Summary and Final Tasks

In this lesson, you learned about general types of nonmarket strategy and specific strategies for activities in institutional (government) arenas. The cast study, continued from the previous lesson, demonstrated the final steps of a nonmarket issue analysis. The findings of the analysis were presented in a tabular Nonmarket Analysis Summary Framework. The continuation of the Case Study information collection process provided additional in-depth experience with the structure and mechanics of renewable portfolio standards (RPS) programs.

You learned:

  • the meanings pf public politics and private politics;
  • three general types of nonmarket strategy for government arenas;
  • details of many specific strategy types for use in nonmarket arenas;
  • through the RPS Case Study, how to assess demand for and supply of nonmarket action;
  • to apply data to the nonmarket analysis of issues related to renewable portfolio standard (RPS) programs.

Have you completed everything?

You have reached the end of Lesson 2! Double-check the list of requirements on the first page of this lesson to make sure you have completed all of the activities listed there.


Source URL: https://www.e-education.psu.edu/eme444/node/318

Links
[1] https://tagul.com/
[2] http://www.lmcuk.com/insight/new-strategy-for-business-success
[3] http://www.flickr.com/photos/jstephenconn/2803464442/in/photostream/
[4] http://www.flickr.com/photos/jstephenconn/
[5] http://creativecommons.org/licenses/by-nc/2.0/
[6] https://www.bloomberg.com/politics/articles/2017-01-04/trump-tariff-on-gm-would-violate-nafta-that-may-not-stop-him
[7] https://www.nytimes.com/2017/01/03/opinion/is-trumps-tariff-plan-constitutional.html
[8] https://www.e-education.psu.edu/eme444/sites/www.e-education.psu.edu.eme444/files/Is%20Trump%E2%80%99s%20Tariff%20Plan%20Constitutional_%20-%20The%20New%20York%20Times%20-%20Jan%202017.pdf
[9] http://www.opensecrets.org/lobby/index.php
[10] http://www.opensecrets.org/resources/dollarocracy/09.php
[11] http://www.opensecrets.org/pacs/index.php
[12] http://www.referendumanalysis.eu/eu-referendum-analysis-2016/section-7-social-media/impact-of-social-media-on-the-outcome-of-the-eu-referendum/
[13] http://www.theatlantic.com/technology/archive/2011/09/so-was-facebook-responsible-for-the-arab-spring-after-all/244314/
[14] http://pakistanhindupost.blogspot.com/2010/05/policy-forum-demands-legislation-for.html
[15] http://www.puc.state.pa.us/general/consumer_ed/pdf/Ratemaking_Complaints.pdf
[16] https://www.federalregister.gov/uploads/2011/01/the_rulemaking_process.pdf
[17] https://pubs.acs.org/cen/news/89/i26/8926news1.html
[18] http://www.epa.gov/cleanpowerplan/clean-power-plan-existing-power-plants
[19] http://www.epa.gov/cleanpowerplan/fact-sheet-overview-clean-power-plan
[20] https://www.oilandgas360.com/d-c-circuit-delays-action-clean-power-plan/
[21] https://www.federalregister.gov/documents/2017/04/04/2017-06522/review-of-the-clean-power-plan
[22] https://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf
[23] http://newsroom.unfccc.int/
[24] http://www.ussif.org/content.asp?contentid=67
[25] https://www.shareholdereducation.com/SHE-proxy_materials.html
[26] http://www.themarea.org/
[27] https://mseia.net/mseia/the-pennsylvania-division-of-mseia/
[28] http://paseia.blogspot.com/
[29] http://mseia.net/membership/benefits-of-membership/
[30] http://files.dep.state.pa.us/Energy/Office%20of%20Energy%20and%20Technology/OETDPortalFiles/GrantsLoansTaxCredits/Solar/approved_pv_installer_list%20112513.pdf
[31] http://www.pennfuture.org/
[32] http://www.betterwithcoal.com/
[33] https://www.highbeam.com/doc/1P3-1805528821.html
[34] http://www.instituteforenergyresearch.org/states/pennsylvania/
[35] https://web.archive.org/web/20111216184948/http://extranet.papowerswitch.com/stats/PAPowerSwitch-Stats.pdf?/download/PAPowerSwitch-Stats.pdf
[36] http://www.pachamber.org/
[37] https://www.e-education.psu.edu/eme444/sites/www.e-education.psu.edu.eme444/files/images/lesson1/PA%20Chamber%20of%20Commerce%20-%20HB%2080.pdf
[38] https://web.archive.org/web/20111216120500/http://www.pachamber.org/www/about.php
[39] http://www.ems.psu.edu/current_undergrad_students/academics/integrity_policy