N.Y. Gen. Mun. Law § 361

§ 361. Service beyond territorial limits. 1. Whenever a surplus of\nsuch public utility service exists over the amount thereof required by\nthe municipal corporation and the residents thereof, such municipality\nmay sell such surplus outside the municipal corporation to persons,\npublic or private corporations or other municipal corporations. Any such\nmunicipal corporation, by agreement with any other municipal corporation\nwhich is authorized to exercise the powers specified in the preceding\nsection, may extend such service to such other municipal corporation\nunder such terms and conditions as may be agreed upon between them\nprovided that if at the time of such extension, a public utility service\nis actually being furnished in such other municipal corporation, such\nextension shall not be effected without the approval of the public\nservice commission.\n 2. Agreements may also be made between two or more municipal\ncorporations, authorized as provided in this article to exercise the\npowers specified in the preceding section, for the joint ownership,\nleasing, construction, acquisition, use or operation of a public utility\nservice, within the combined territorial limits of such contracting\nparties. The method of operation of and the rates, rentals and charges\nfor such service and the procedure for their collection shall be fixed\nby such agreements.\n