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A utility revenue bond is used to fund capital projects in areas considered essential to public services including hospitals, fire service, water and waste treatment facilities, or improvements to the electrical grid. These services generate revenue through customer fees which provide cash flows that can cover debt service obligations.
Utilities deliver services considered essential to their customers such as water and electrical service. Due to the necessity of the service they provide, it is common for utility revenue bonds to feature a net revenue pledge. Since these facilities are essential to the community, upkeep must be implemented to maintain them in good working order.