Whenever any public power district organized under Chapter 70, article 6, is engaged in competitive retail electric service in any incorporated municipality within this state, with a system for the retail sale of electric energy owned by such municipality, such district is hereby directed, within one year from October 19, 1963, to enter into appropriate agreements with such municipality for the operation by the municipality (1) of the distribution system of the district in the municipality; (2) of all its retail business served through such distribution system; and (3) its system in all areas over which the municipality has zoning power, including such secondary transmission lines as are used in the service of the defined area. Such agreement shall provide for such operation by the municipality until January 1, 1972, or such time as such district shall have fully paid or accumulated reserves for the payment of all of the bonds or other obligations of the district incurred as the cost of construction or the purchase price of such system.