N.Y. PBS Law § 66-H

§ 66-h. Certain electric corporations; payment equivalent to tax. The\ncommission shall require each electric corporation that purchases\nelectricity from an energy business as defined in subdivision (c) of\nsection three hundred one-i of the tax law (1) that is a co-generation\nfacility, as such term is defined in subdivision two-a of section two of\nthis chapter, or (2) that is a qualifying facility, as such term is\ndefined by section two hundred one of the Public Utility Regulatory\nPolicies Act of 1978 (Public Law 95-617) that is a co-generation\nfacility, or (3) that has executed or will execute a contract for the\nsale of electricity through negotiation with an electric corporation or\nan auction conducted by an electric corporation pursuant to a\ncompetitive bidding plan approved by the commission, to pay, in addition\nto payments made for such purchased electricity under a contract with\nsuch electric corporation, (i) an amount equal to the tax imposed under\narticle thirteen-A of the tax law with respect to each Mcf of natural\ngas used to generate such electricity and (ii) with respect to contracts\nfor the sale of electricity and/or steam executed prior to January\nfirst, two thousand, any sales and compensating use taxes imposed on\nnatural gas used in the production of electricity and/or steam by or\npursuant to the authority of section eleven hundred seven or subdivision\n(a) of section twelve hundred ten of the tax law, unless such sales and\ncompensating use taxes imposed are otherwise accounted for in the\npayments the electric corporation makes under that contract; provided,\nhowever, that any such amount paid by such electric corporation shall be\nrecovered through a fuel adjustment mechanism authorized by the\ncommission; provided, further, that such amount shall not be recovered\nfrom charges for residential use provided by such electric corporation.\n