The term "operation and maintenance expenses" does not include:
1. Any allowance for depreciation, except as otherwise provided in subsection 7 of NRS 396.825;
2. Any costs of reconstruction, improvements, extensions or betterments;
3. Any accumulation of reserves for capital replacements;
4. Any reserves for operation, maintenance or repair of any facilities;
5. Any allowance for the redemption of any bond or other security evidencing a loan or other obligation or the payment of any interest thereon;
6. Any liabilities incurred in the acquisition or improvement of any properties comprising any project or any existing facilities, or any combination thereof; and
7. Any other ground of legal liability not based on contract.
(Added to NRS by 1967, 5)