Paying more for power is good for you

- Green electricity retailer Bullfrog Power is getting ready to launch a new ad campaign that promises to spark some heated discussion, particularly in a province where power prices are going nowhere but up.

The tagline for the campaign is simple: "Pay More For Energy."

From March 22 until late April we'll see TV, radio and online ads, as well as posters on bus shelters, telling us that paying more for the electricity that lights our homes, keeps our food cold and charges our iPods is a good thing.

I haven't seen this kind of advertising bravado since Buckley's launched its now-famous cough syrup campaign with the tagline "It tastes awful. And it works."

Tom Heintzman, president of Bullfrog Power, says the campaign aims to trigger a serious dialogue that has yet to happen, but which is desperately needed.

"The whole purpose of the campaign is to drive people to a website called www.paymoreforenergy.ca," he says, explaining that a Facebook site has been set up where people can exchange views and learn about the importance of pricing carbon into energy costs.

It could be a carbon tax, or a much broader pollution tax. It could come from a carbon cap-and-trade system. In the electricity market, it could come in the form of cleaner power sources that are more expensive – for the time being, at least – compared with keeping inefficient coal plants built more than 35 years ago in service.

Bullfrog hopes the message will go viral. The argument is that consumers haven't been paying the true cost of using dirty electricity and fuels. There are environmental costs to using fossil fuels, and there are health costs associated with using polluting energy sources that are in effect subsidized by our already overburdened health-care system.

Bullfrog is saying that consumers have to start accepting and adjusting to the idea that energy prices need to go up in a carbon-strained world where having cleaner air and keeping climate change in check comes at a necessary premium.

This message is certainly going to ruffle more than a few feathers. We've just been through an economic downturn. Jobless numbers remain a drag on the economy. For many people money is tight. We're seeing insurance costs rising, the harmonized sales tax (HST) will be hitting Ontario electricity and gas bills come July, and the cost of many grocery necessities keeps creeping higher.

The list goes on. Simply put, consumers are feeling squeezed from every direction.

Industry is also feeling the pressure. If electricity prices in Ontario go up, and they will, this could drive manufacturing out of the province and into lower-cost jurisdictions.

That, of course, is the doomsday scenario. And no question: higher energy prices will hurt, some more than others. But it helps to put things into perspective.

First, all new energy infrastructure is going to cost more than existing infrastructure built decades ago. No amount of protest or complaint can hide us from this fact. No government should be blamed. That's just the way it is.

A new nuclear plant will cost more today than one built in the 1970s. Ditto for coal plants and hydroelectric plants. Can you image the cost today of building the power generation stations at Niagara Falls from scratch?

And like it or not, we need to upgrade and add smarts to our power grid. It's been neglected too long and needs to be pulled into the 21st century.

So, even if you don't support the idea of building health and environmental costs into energy prices, you're still going to pay more for your energy – dirty or clean.

But will paying a carbon penalty for using dirty energy or a premium for using clean energy drive our economies to ruin? "Studies that have been done show the economy is going to continue to grow and grow in a healthy way, and we would be shaving just a bit off every year by moving to carbon pricing," says Heintzman.

Okay, decent growth, responsible energy policy – that doesn't sound too bad, right? After all, have you seen electricity prices in Europe? You'll pay twice as much in Germany and the United Kingdom, and three times as much in Denmark. All three countries ranked in the Top 15 of the world's most competitive economies in 2009, according to a 134-country ranking by the World Economic Forum.

Electricity in many U.S. states, such as New York and California, is also far more expensive than in Ontario. More than half of U.S. states have put in place renewable portfolio standards (RPSs) that commit utilities to putting a certain percentage of green energy – usually about 20 per cent by 2020 – into their electricity mix. A U.S. federal RPS is in the works. This will drive up electricity prices across the United States.

So Ontario isn't alone here. Canada isn't alone. The risk of industry fleeing elsewhere becomes much lower when elsewhere isn't any better.

Besides, if you're an oilsands, mining or logging company you're stuck, like it or not, where the resource is located. You adapt.

How do jurisdictions with more expensive electricity cope? It's simple: they use less of it. That's the remarkable thing about higher prices. It's an efficient way to squeeze waste out of the system.

"People would be surprised at how powerful that pricing lever is, and frankly how little the price increase needs to be to deal with climate change," says Heintzman.

Homeowners, businesses, governments and industrial facilities will be motivated to offset rising costs by doing a better job of managing their energy use and investing in energy-reducing retrofits.

Some will need help. A new $650-million industrial efficiency program designed by the Ontario Power Authority is an example of how government can ease the transition. The program, open to 60 of Ontario's largest industrial players, will pay up to 70 per cent of the cost of an energy-saving project. Each project aims to reduce energy use by 30 per cent.

Likewise, there are both federal and provincial programs to help homeowners lower their bills through energy retrofits in advance of rising energy prices. The trick is to make sure low-income and fixed-income consumers get support through rebates and changes to the tax structure.

If it all sounds eerily familiar to the Green Shift plan proposed by Stéphane Dion, former leader of the federal Liberal party, that's because it is.

Dion's failure to sell the plan doesn't mean it wasn't a good idea. It means he failed to communicate it properly or the population, confused by opposition fear-mongering, just wasn't ready for it.

Are we ready now? It's more likely we're less ready than we were when Dion first pitched the idea. For this reason, Bullfrog may be going out on a limb with its Pay More For Energy campaign.

Or maybe not.

Maybe it's time to dust off the Green Shift, or something like it, and have a civilized discussion without the distraction of an election. "It is a dialogue that just hasn't happened," says Heintzman.

Sure it tastes awful. But it just might work.