They gonna have to give a better reason than that, an im just speaking from my experience, an this very thing is what i do..you can refuse service for about any GOOD reason, bein a certain distance, or the line already being overwhelmed. Some utilities are forced through city councils, by laws or ordinances to refuse service in certain circumstances. It can get technical, but just refusing to give you service because they just dont want to..that dont really happen much…not without a reason. If the line that is running through your property is is a fire service…its not technically supposed to be tapped for commercial or residential use anyway..but it happens…if it is an old line that has taps and fire service on it, they may have a policy to not add anymore due to fire flow…i have no idea, im just givin you some ideas. In most cases, if you got the scratch and are willing to pay material and impact fees…they will hook you up. This is odd to me, but its different everywhere you go…i know for a fact…we dont just refuse to serve people cause…meh…we dont want you to have water. Hate your dealin with this.