(1) The obligations of a nondefaulting municipality under a purchase agreement with an agency or arising out of the default by any other municipality with respect to a purchase agreement shall constitute special and limited obligations of the nondefaulting municipality payable solely from the revenue and other money derived by the nondefaulting municipality from its municipal utility with respect to which the purchase agreement relates and shall not be construed as constituting a debt of the nondefaulting municipality. If and to the extent provided in the purchase agreement, such obligations shall be treated as expenses of operating a municipal utility owned and operated by the nondefaulting municipality. It shall be the mandatory duty of any municipality entering into any contract or purchase agreement with an agency to fix, maintain, revise, and collect fees, rates, rents, and charges for functions, services, facilities, or commodities, furnished to its customers and users by and through its municipal utility as will be sufficient to pay the cost of operating and maintaining its municipal utility, renewals, or replacements thereto, including all amounts due and payable under any contract or purchase agreement with an agency, the interest on and principal of any outstanding bonds or other indebtedness of the municipality, whether at maturity or upon sinking-fund redemption, which are payable from the revenue of its municipal utility, and to provide, as may be required by any resolution, ordinance, trust indenture, security instrument, or other agreement of the agency, for any reasonable reserves for operating and maintenance expenses and for any margins or coverages over and above debt service.

(2) The purchase agreement also may provide for payments in the form of contributions to defray the cost of any purchase permitted by the purchase agreement and as advances for any such purchase subject to repayment by the agency.