(1) The governing authorities of a municipality are authorized and empowered, in their discretion, to enter into an interlocal agreement with a rural water association operating within the corporate limits of the municipality that requires the association to terminate the water service of any of its customers who are thirty (30) days or more delinquent in the payment of charges for sewer services provided by the municipality.

(2) Any agreement entered into under this section shall at a minimum:

(a) Require the municipality to notify the association of any customer of the association who also has sewer service provided by the municipality who is thirty (30) days or more delinquent in the payment of sewer charges by a method agreeable to the municipality and the association;

(b) Provide that upon receipt of a notification the association shall terminate the water service of the named customer;

(c) Provide that upon satisfaction of the delinquency and any fees connected with the delinquency and the termination of water service, the association shall restart the water service of the customer;

(d) Provide that the municipality shall save and hold harmless the association against any and all claims based on the disconnection of water or sewer service and any other damages resulting from any action taken by the association under an interlocal agreement entered into under this section.

(3) Upon entering into an interlocal agreement under this section, the association is authorized to terminate the water service of any customer delinquent in the payment of sewer charges to the municipality pursuant to the terms of the interlocal agreement.