"Isn't that just implying that most energy is artificially cheap, relative to its externalities?"

Yes it is. But if you're going to charge 'real' price (even assuming you can), people with the least disposable income will have to pay disproportionally more for their energy, which is a a basic need in 2015. Plus it would cause ripple effects that are impossible to predict. So the prudent way of mitigating this is with targeted policies, like building efficiency. It's a political decision. Of course one might say 'we should charge everything at the full rate and let the market sort it out', which is a fine position (one I personally lean towards, for as much as that matters) but it's irrelevant to the fact that there are many groups that don't agree. So what we have now is a system with many groups pushing in various directions, and 'patches' for situations where that causes unwanted effects that all parties can agree on (well, a majority can agree on) should be mitigated somehow.

"Why can I own two new homes with 8' ceilings and heat them both(even if I don't live at one for 90% of the time), but I can't own one new home with 12' ceilings?"

So to come back to the issue at hand, I can also buy a 10MW heater, put it outside in my garden and have it 'waste' energy 24/7. We don't have laws against that (afaik). But our policies rely partly on the assumption of economically rational actors, which to a degree and in the aggregate is the empirically verified reality.

In other words, for ever policy I'm sure one can think of 100 ways to stay within the law yet violate the spirit of the policy. That's just the nature of governance, and it works fine in the vast majority of cases. Law is not a closed rule-based system like computers are, and that's fine.

(actually that last part is up for debate; even Montesquieu (who was the guy to come up with the original theory of 'balance of three powers') was of the opinion that perfect law should be just that, and that judges should do nothing but apply rigid rules to facts. But that's getting way more off topic than is reasonable...)