"Any costs and benefits arising from the transaction are factored into the price of electricity." You are assuming a perfectly competitive market for electrici

"Any costs and benefits arising from the transaction are factored into the price of electricity." You are assuming a perfectly competitive market for electricity, in which there is no consumer or producer surplus. The parent you are replying to is essentially asserting that this is not the case in the real world - The pricing of electricity is based on a comparison of marginal values and costs, not absolute values, and thus misses the entirety of the consumer surplus (by definition). This is a positive value that belongs on the ledger next to any positive and negative externalities that is not taken into account by the price of electricity.