§ 66-c. Conservation of energy. 1. It is hereby declared to be the
policy of this state that it is in the public interest to encourage, at
rates just and reasonable to electric and steam corporation ratepayers,
the development of alternate energy production facilities, co-generation
facilities and small hydro facilities in order to conserve our finite
and expensive energy resources and to provide for their most efficient
utilization when such facilities are needed to fulfill the energy,
capacity or other electric system needs of this state, as determined by
the most recent state energy plan. In furtherance of this declared
policy, the commission shall encourage the participation of utilities in
co-generation, small hydro and alternate energy production facilities
either directly or through subsidiaries formed pursuant to the
provisions of subdivisions three and four of this section. In addition,
the commission shall require any electric corporation or steam
corporation (a) to enter into long-term contracts to purchase or wheel
electricity or useful thermal energy from any alternate energy
production, small hydro or co-generation facility, with an electric
generating capacity of up to eighty megawatts, under such rates, terms
and conditions as the commission shall find just and economically
reasonable to the corporation's ratepayers, non-discriminatory to
co-generators, small hydro producers and alternate energy producers and
further the public policy set forth herein; and (b) to provide
supplemental or back-up power to any alternate energy production, small
hydro or co-generation facility on a non-discriminatory basis and at
just and reasonable rates; provided, however, that nothing contained in
this section shall require any such electric or steam corporation to
construct any additional facilities for such purposes unless such
facilities are paid for in full by the owner or operator of the
co-generation, small hydro or alternate energy production facility.

2. Notwithstanding any other provision of law, the minimum sales price
for purchased electricity from any alternate energy production facility,
co-generation facility or small hydro facility of six cents per
kilowatt hour for each utility, as established by chapter eight hundred
forty-three of the laws of nineteen hundred eighty-one, shall remain in
full force and effect (a) for any contract fully executed by the parties
and filed with the commission on or before June twenty-sixth, nineteen
hundred ninety-two and (i) providing for the purchase of electricity at
such minimum sales price, or (ii) providing for the purchase of
electricity at a utility tariff rate referencing a statutory minimum
sales price, or (iii) providing for the reconciliation or recalculation
of such contract's purchase price by comparison to such statutory
minimum sales price or tariff rate, for the duration of any such
contract and subject to the terms and conditions of such contract and
performance thereunder, provided, however, that such minimum sales price
shall be implemented in accordance with the policies and conditions
established by the commission, and (b) for any such facility concerning
which a final and unappealable judgment of a court of New York state,
rendered prior to January first, nineteen hundred eighty-seven,
determined that such facility was entitled to receive such minimum sales
price, provided that such minimum sales price shall be applicable to all
purchased electricity from such facility irrespective of any
modifications or additions to such facility that may be necessary to
enable such facility to achieve the electric power production capacity
of such facility as set forth in an order of the Federal Energy
Regulatory Commission issued prior to January first, nineteen hundred
eighty-seven granting an application for certification of such facility
as a qualifying facility, and (c) for any such facility which has been
producing electricity in addition to the electricity which is the
subject of a contract previously entered into with an electric
corporation for such facility, which contract provides for the purchase
of electricity in accordance with subdivision (a) of this section;
provided, however, that the minimum sales price shall only be paid for
electricity that does not exceed the maximum annual amount of
electricity produced by such facility as of the effective date of this
subdivision and does not exceed the amount of electricity provided for
in the contract by more than ten percent, and provided, however, that
such minimum sale price shall be implemented for the duration of the
contract in accordance with policies and conditions established by the
commission.

3. Notwithstanding any other provision of law, any gas, electric or
steam corporation shall, upon application to the commission and the
commission's approval thereof, be authorized to establish, and to
finance out of retained earnings, a subsidiary corporation, which
corporation shall have as its sole purpose, except as provided in
subdivision five of this section, the ownership and/or operation, in
whole or in part, of one or more co-generation, small hydro or alternate
energy production facilities. Within a reasonable time after its receipt
of a complete application to establish such subsidiary or to finance
such subsidiary out of retained earnings, the commission shall approve
such application unless it shall find that the proposed subsidiary or
financing may affect the corporation's ability to meet its obligation to
provide safe and adequate service at just and reasonable charges to its
own customers. Any such subsidiary corporation shall be exempt from any
regulation by the commission under this chapter and the commission shall
have no authority to regulate any rates, charges, service terms or
service practices relating to any electricity, gas or steam produced by
any such subsidiary corporation at any such facility except as
specifically provided in subdivision one of this section.

4. (a) Any subsidiary corporation established by an electric, gas or
steam corporation pursuant to the authorization of subdivision three of
this section shall comply with the following criteria:

(1) If any such subsidiary shall obtain the use of transmission
facilities or any services necessary for the sale or purchase of the
energy generated from its co-generation, small hydro or alternate energy
production facilities from any affiliated gas, electric or steam
corporation, it shall do so only pursuant to a tariff filed with the
commission by such gas, electric or steam corporation;

(2) Any such subsidiary corporation shall operate independently from
any affiliated gas, electric or steam corporation in the establishment
and operation of co-generation, small hydro or alternate energy
production facilities and in the sale of energy produced from such
facilities. It shall maintain its own books of account, have separate
officers, utilize separate operating, marketing, installation, and
maintenance personnel, and utilize separate computer facilities;

(3) Any such subsidiary corporation shall deal with any affiliated
gas, electric or steam corporation only on an arm's length basis;

(4) All transactions between such a subsidiary corporation and an
affiliated gas, electric or steam corporation which involve the
transfer, either directly or by accounting or other record entries, of
money, personnel, resources, other assets or anything of value, shall be
reduced to writing. A copy of any contract, agreement, or other
arrangement entered into between such entities shall be filed by the
affiliated gas, electric or steam corporation with the commission within
thirty days after the contract, agreement, or other arrangement is made.
This provision shall not apply to any transaction governed by the
provision of any existing state or federal law, regulation or tariff.

(b) Any gas, electric or steam corporation affiliated with such a
subsidiary corporation shall:

(1) not engage in promoting the sale of energy from the subsidiary's
co-generation, small hydro or alternate energy production facilities;
and

(2) not provide to any such subsidiary corporation any customer
proprietary information, unless such information is made available to
any member of the public upon request on the same terms and conditions
under which such information is made available to the subsidiary.

(c) The rate of return for any gas, electric or steam corporation
affiliated with any such subsidiary corporation shall not be based in
whole or in part on the capitalization of such subsidiary nor shall the
revenue requirements for any such gas, electric or steam corporation be
based on any transactions between the gas, electric or steam corporation
and its subsidiary which are not in compliance with paragraph a of this
subdivision.

5. A subsidiary corporation established pursuant to the authorization
of subdivision three of this section may have as an additional purpose
the ownership and/or operation, in whole or in part, of one or more
facilities located outside this state for the production of electric
power and/or thermal energy, together with any land, work, system,
building, improvement, instrumentality or thing necessary or convenient
to the construction, completion or operation of any such facility,
including also such transmission or distribution facilities located
outside this state as may be necessary to conduct electricity or useful
thermal energy to users located at or near a project site. Except as
expressly provided herein, nothing in this subdivision shall be
construed to modify, alter, limit, restrict, abrogate or enlarge the
application of any other provision of this section. For the purposes of
this subdivision, the term "facilities located outside this state for
the production of electrical power and/or thermal energy" shall mean and
include each of the following:

(i) Any "small hydro facility" as defined in subdivision two-c of
section two of this chapter;

(ii) Any solar, wind turbine, waste management resource recovery,
refuse-derived fuel or wood-burning facility which produces electricity,
gas or useful thermal energy;

(iii) Any facility which is fueled by coal, gas, wood, alcohol, solid
waste refuse-derived fuel, water or oil to the extent oil is used as a
backup fuel for such facility, and which simultaneously or sequentially
produces either electrical or shaft horsepower and useful thermal energy
which is used solely for industrial and/or commercial purposes; and

(iv) Any facility which is fueled by coal, gas, wood, alcohol, solid
waste refuse-derived fuel, water or oil, and which produces electrical
power, shaft horsepower or thermal energy which is used solely for
industrial and/or commercial purposes.