§ 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.

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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.