Yes, you have hit the nail on the head.
Several years ago the CAA (Heathrow's regulator) looked at alternatives to the cost-plus approach to regulation. However, the airlines (led by BA) were vehemently opposed to a change. This short sighted approach has regrettably led to the current situation.
Things are unlikely to change now, as the chap now in charge of CAA regulation is regarded as a died in the wool regulator, not open to new ideas. And now that the grossly inflated costs of T5 and T2 are in the regulated asset base it is difficult to turn back the clock.