(1) Credit. Residual petroleum product and non-highway diesel motor fuel (i) imported into this state by such electric corporation which is a petroleum business where the tax liability under section three hundred one-a of this article is imposed on such electric corporation and where the residual petroleum or non-highway diesel product so imported is used by such electric corporation to fuel generators for the purpose of manufacturing or producing electricity or (ii) purchased in this state by such electric corporation by the use of a valid direct payment permit whereby such electric corporation assumed full liability for tax with respect to such product where such product so purchased is used by such electric corporation to fuel generators for the purpose of manufacturing or producing electricity.

(2) Reimbursement. Residual petroleum product and non-highway diesel motor fuel purchased in this state by such electric corporation where the tax imposed by section three hundred one-a of this article with respect to such residual petroleum or diesel product was paid and the utility absorbed such tax in the purchase price of such fuel and where such product is used by such electric corporation to fuel generators for the purpose of manufacturing or producing electricity.

(b) Calculation. The amount of the credit or reimbursement shall be determined by multiplying the gallonage of the residual petroleum product eligible for the credit or reimbursement times the basic credit or reimbursement per gallon of two and ninety-eight hundredths cents and by multiplying the gallonage of all diesel product eligible for credit or reimbursement times the basic credit or reimbursement per gallon of three cents. The basic credit or reimbursement per gallon for residual petroleum product and diesel product shall be adjusted at the same time and in the same manner as set forth in subdivisions (f) and (g) of section three hundred one-a of this article for the motor fuel and diesel motor fuel rate and the residual petroleum product rate. All the provisions of subdivision (h) of such section shall apply to such adjusted credit or reimbursement and such adjusted credit or reimbursement shall be published at the same time and in the same manner as such rates are published. The credit or reimbursement determined pursuant to this section shall be rounded to the nearest one-hundredth of a cent. Provided, however, that on April first, nineteen hundred ninety-nine, there shall be added to the basic credit or reimbursement amount, with respect to both residual petroleum product and diesel product, as then adjusted and in effect, the amount of one-half cent. On the immediately following first day of January and each January thereafter, there shall be added to the basic credit or reimbursement amount, with respect to both residual petroleum product and diesel product, as then adjusted and in effect on such date (determined with respect to the basic credit or reimbursement amount only, without reference to such one-half cent), the amount of one-half cent.

(c) Application of the credit or reimbursement. The credit shall be applied against liability for tax under this article for the same period during which the credit arose. Any excess may then be applied to tax liability under this article for subsequent periods.

(d) Any reimbursement of tax may be applied for not more often than monthly. An electric corporation entitled to reimbursement under this section, in lieu of such reimbursement, may take credit therefor on a return filed under this article.