Section 361. Service beyond territorial limits

1. Whenever a surplus of
  such public utility service exists over the amount thereof  required  by
  the  municipal  corporation and the residents thereof, such municipality
  may sell such surplus outside  the  municipal  corporation  to  persons,
  public or private corporations or other municipal corporations. Any such
  municipal corporation, by agreement with any other municipal corporation
  which  is  authorized  to exercise the powers specified in the preceding
  section, may extend such service to  such  other  municipal  corporation
  under  such  terms  and  conditions  as  may be agreed upon between them
  provided that if at the time of such extension, a public utility service
  is actually being furnished in such other  municipal  corporation,  such
  extension  shall  not  be  effected  without  the approval of the public
  service commission.
    2.  Agreements  may  also  be  made  between  two  or  more  municipal
  corporations,  authorized  as  provided  in this article to exercise the
  powers specified in the preceding  section,  for  the  joint  ownership,
  leasing, construction, acquisition, use or operation of a public utility
  service,  within  the  combined  territorial  limits of such contracting
  parties. The method of operation of and the rates, rentals  and  charges
  for  such  service and the procedure for their collection shall be fixed
  by such agreements.