While the term “service area” does not appear in the Utilities Commission Act, the obligation to serve, which is set out in section 28, is limited to 200 metres from a public utility’s supply line. This is in effect the definition of a public utility’s service area in BC.

A public utility could grow its service area by applying to the BCUC to expand its infrastructure, i.e. to add more supply lines. The BCUC has the power to reject such a request under section 45 of the Utilities Commission Act unless it considers that “public convenience and necessity” require it.

Alternatively, the BCUC may order a public utility to expand its service area, pursuant to sections 29 and 30 of the Utilities Commission Act. This happens either when a person outside a service area requests service, or when the BCUC itself decides that an expansion of a service area is “feasible and required in the public interest” and will not “necessitate a substantial increase in rates chargeable, or a decrease in services provided, by the utility elsewhere.”

Using these powers, the BCUC can ensure that utilities’ services areas do not overlap, and that utilities are able to take advantage of economies of scale in their respective service areas without customers being “poached” by another utility. Economies of scale can reduce the utilities’ average cost of service, and lead to lower rates.

The BCUC is also able to ensure that the costs of any service area expansions are properly allocated between new and existing customers, and over an appropriate period of time. Large utilities sometimes have a “mains extension test” approved in advance by the BCUC that sets out the process for potential customers outside their service areas to apply to be connected, and the financial arrangement that would apply.