I get the difference in country perspective, and the difference between a regulated local monopoly (which I believe you have in US) vs a market structure with a regulated distribution network, but a large choice of retail suppliers.
Incidentally, there are 6 large UK suppliers, and multiple smaller ones, so this is far from perfect competition, but also far from a monopoly. According to this report retail margins are about 7 per cent, and the previous margin was only about 3 per cent. Even in a "good year", the big six suppliers are making an average profit of around £100 per year on an average bill of around £1400 per year. So if the retail price dropped to 9 pence per kWh as opposed to 10 pence per kWh, the firms would probably be making a net retail loss.
While the current profit margin probably does encourage entry, I can't see any way that the retail price could drop to 4.5 pence per kWh and still allow a supplier to make a profit. It seems quite possible that a new supplier could start up offering 5 pence per kWh, and would rapidly grab market share: the fact that no-one in UK is trying that suggests that it just doesn't stack up as NPV positive.
Example nicked from this online Berkeley lecture.
Monopolies are bad (morality and economics agree here).
Firms that pollute are bad (morality and economics agree here).
What about monopolies that pollute?
What about strong monopolies that pollute and receive government subsidies?
Well...
Pollution, and other negative externalities, cause firms to produce too much of their product. That's because they don't pay the full cost of the product, including the impact of pollution.
The equilibrium behaviour for monopolies is to produce too little of their product, to keep prices and profits high.
So a monopoly that pollutes is subject to two opposite tendencies: the unpriced-pollution tendency to produce too much, and the monopolistic tendency to produce too little. If the effects are of comparable magnitude, then the monopoly might be much closer to social optimum than a free market would be (the social optimum, incidentally, will generally involve some pollution: we need to accept some pollution in the production of fertiliser, for instance, in order to have enough food to stop people starving).
In fact, if the monopolistic effect is too strong, then the firm may under-produce, even taken the pollution effect into account. In that case, we can approach closer to the social optimum by... subsidising the polluting monopoly to produce more!!
And that, my friends, is why economics is not a morality tale.