> And basically, they stuffed that up for consumers by deciding to let the networks earn a guaranteed rate of return, based on their costs. That is, the more they spent, the more they earned.
This is an ignorant criticism. Every way of structuring utility markets has one problem or the other. If you deregulate the market, you end up with limited competition because of high barriers to entry. If you set rates to guarantee a fixed return on investment, you incentivize gold plating the network. And if you have the government set price caps, you get politicized prices that are too low and starve the utility of money needed to improve the network. Out of the alternatives, rate of return regulation is probably the least bad option.
Also, there are worse things than high prices limiting demand for coal-based electricity.
This gold plating cost-plus work in Australia was about the Government funding infrastructure improvements without checking the demand forecasts. The network has been built for doubling of demand, even as demand is dropping due to customers using more efficient devices all the way from TVs to HVAC.
This is an ignorant criticism. Every way of structuring utility markets has one problem or the other. If you deregulate the market, you end up with limited competition because of high barriers to entry. If you set rates to guarantee a fixed return on investment, you incentivize gold plating the network. And if you have the government set price caps, you get politicized prices that are too low and starve the utility of money needed to improve the network. Out of the alternatives, rate of return regulation is probably the least bad option.
Also, there are worse things than high prices limiting demand for coal-based electricity.