Thought experiment:
For reference only look at page 6 of the pdf document:
http://www.hydroquebec.com/publications/en/docs/comparaison-electricity-prices/comparison-electricity-prices-2017.pdfLet's say the Federal Reserve of Energy becomes a critical input for the supply of energy in North America and, in order to stimulate aggregate demand, decides to fix the price of electricity everywhere at 7,07.
What happens to supply?
I submit that there would be no shortage.
What happens to private players in the industry?
I submit that there would be a risk of capital misallocation
What about unintended consequences for ignoring markets signals?
I submit there are a few, including slowing of innovation and waste.
I enjoy the low electricity bills but still, I wish that rates would reflect the true cost.
The above Federal Reserve of Energy scenario would assume that the lunch is free.