1. (1) The district may enter into operating contracts with operators for the management, operation, and maintenance of district-owned energy infrastructure facilities within the service area described in Section 17B-2a-1405.

2. (2) An operating contract shall:

   1. (a) require the operator to manage, operate, and maintain the facility in accordance with applicable law and prudent industry standards;
   2. (b) specify the payments the operator shall make to the district, which shall be structured to cover, at minimum, the district's debt service obligations and operating costs attributable to the facility;
   3. (c) specify the term of the contract, which may not exceed 40 years;
   4. (d) provide that upon expiration or termination of the contract full operational control of the facility returns to the district free of any claim of the operator; and
   5. (e) specify the conditions under which the contract may be terminated or renewed.

3. (3) An operating contract entered into under this section:

   1. (a) is a service agreement; and
   2. (b) does not convey a leasehold interest, ownership interest, or any other property interest in the facility to the operator.

4. (4) The district shall require each operator to maintain:

   1. (a) adequate insurance coverage as determined by the board; and
   2. (b) where appropriate, performance bonds or other financial security acceptable to the board to protect the district's interests under the operating contract.
5. (5) The board shall structure each operating contract to ensure that each operating contract complies with applicable federal tax law governing qualified management contracts as may be required by a federally tax-exempt revenue bond.

Enacted by Chapter 474, 2026 General Session