The regulatory compact includes an obligation for a public utility to provide regulated services to all customers in its service area who want service.

The obligation to serve is an essential aspect of the regulatory compact; it is explicitly provided for in the Utilities Commission Act: Section 28 obliges public utilities to provide service to anyone within 200 metres of a supply line.

The obligation to serve ensures that all residents in a public utility’s service area have access to its energy services. Utilities generally have an economic incentive to accept new customers who are cheaper to serve and to decline to serve those who would be more expensive. The obligation to serve prevents utilities abusing monopoly power to “cherry pick” more profitable customers and deny service to others, who have no alternative provider.

The BCUC can relieve a public utility from the obligation to serve only “after a proper hearing and for proper cause.”

The BC government, however, can relieve a public utility of the obligation to serve without a hearing. In a 2024 decision, the BC Supreme Court upheld a BC government decision that directed the BCUC to relieve BC Hydro of its obligation to serve various “cryptocurrency mining” projects. The Court relied on section 3 of the Utilities Commission Act that authorizes the government to direct the BCUC “to exercise a power or perform a duty, or to refrain from doing either.”

The just and reasonable rate provided under the regulatory compact must be sufficient to compensate public utilities for taking on the obligation to serve. For instance, utilities must provide sufficient capacity to accommodate anticipated new customers and must connect all customers in their service area, regardless of the cost of connection.

The obligation to serve is limited (in the case of BC to within 200 m of a supply line) because the regulatory compact requires utilities to be compensated “for the service provided by the utility” (section 59 (5) of the Act). The larger the area over which the utility has to guarantee to serve customers, the larger the rates would be for all customers. The definition chosen in the Act is arbitrary, but provisions also exist in the Act to extend the service area beyond the range of 200 m from a supply line.