Section 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.