That is the topic of my latest Bloomberg column.  The core problem is that if you let prices go up “too much” (i.e., to where they ought to be), many people will stop paying their bills.  We don’t in fact have the political economy in place to enforce the wealth transfer to the public utility:

You might think, as I do, that utilities should take a relatively tough stance on delinquents. Still, the realities of politics can intervene. By one estimate, Truss’s plan would lead to average energy bills of £2,500, compared to £3,548 with no plan.

That is quite a difference, and many people might have trouble paying the higher amount. They might be able to pay more, but at what cost? Fewer pub visits? No satellite TV? Would people in fact choose such austerity? Customers know that if enough of them do not pay their bills, it would be very difficult

Keep reading this article on Marginal Revolution.

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