What is a vastly more interesting question is what is the most perverse set of incentives the proposed system could result in, or what are ways the new system could fail, sometimes you never understand these until implementation, and only at that point is it discovered that most problems are not simple.

Your entire proposition is founded on the axiom that the free market is the ultimate good in running efficient systems, but the free market is reactionary (a way to fail) and the free market makes distinctions between owner class people, intermediary class people, and customer class people (misaligned incentives are a way to fail).

Fundamentally there is a disconnect between who pays for a water pipe that bursts and who pays to weatherize power plants, so you end up with a terrible set of incentives. Unless every owner of a burst pipe can successfully sue the power company for losses, I can't see a situation in which the free market would win over a well planned/regulated system.

We went to the moon. We built nuclear subs. The world runs on American technologies which are a major output of our institutions. We are one of the few countries with clean water running into our kitchen faucets. Strong, responsible, accountable institutions have proven to make this country great.

There are multiple potentially valid ways to do better than last time:

  - Guide the free market (your solution)
  - Regulate customers (pipes must be insulated/buried)
  - Regulate the producers (all power plants must be weatherized)
  - Give regulatory authority to experts (like regulation, but lighter weight, and much more easily changable)
  - Nationalize infrastructure