I get it that at some point using an extra KwH of electricity will require the utility company to build more infrastructure (power plant, transformers, etc) and cause the unit cost of electricity to go up - but they could then, in turn, raise the price and pass along that higher price AND a profit margin to me, the consumer. Right?
Still not seeing how discouraging me from using electricity is positively influencing the power company's bottom line.
Don't forget, it is a regulated business for the most part. Their bottom line is dependent on pleasing the state's public service commission whose job in most states is to look out for the interest of the common good. Non wasteful use of electricity is in the common good. (As prompted this discussion.)
The utility may not be able to pass along price increases to the customer. If the public service commission believes that expenditures on capital equipment were not performed in a prudent fiduciary manner, they can disallow that cost from being passed through to yourselves.
I don't think this is a bad thing. As I've pointed out elsewhere on this site, public utilities have invested a tremendous amount in capital expenditures. Now - look at your electric bill and look at the bill from your cable or cell phone company. Think of what you get. Heat, light, air conditioning, refrigeration are some of the things you will get. In addition, you can charge that cell phone or watch that cable TV. Yet, I think in relative proportion to things that you value in life, you get a better deal from the power bill. The regulation of the natural monopoly has given you that. You also have state representatives giving you some protection from being ripped off.