THE CORPORATION OF THE TOWN OF MARKHAM

COMMODITY PRICE HEDGING POLICY

Interpretation

This policy shall be interpreted and applied in accordance with the requirements of the Municipal Act, 2001 (“the Act”) and any regulations passed thereunder (“the regulations”).  Terms used in this policy have the meanings applicable to those terms in the corresponding sections of the Act and the regulations.

Purpose

The purpose of this policy is to adopt a statement of the Town’s commodity price hedging policies and goals relating to the use of financial agreements.  Section 6(1) of O. Reg. 653/05 requires the adoption of such statement before the Town may enter into commodity price hedging agreements.

Statement of Commodity Price Hedging Policies and Goals

a)                   The Town will consider commodity price hedging agreements as a means of fixing, directly or indirectly, or enabling the Town to fix, the price or range of prices to be paid by the Town for the future delivery of some or all of the commodity or the future cost to the Town of an equivalent quantity of the commodity, where it is advantageous for the Town to do so.

b)                   In determining whether a particular commodity price hedging agreement is advantageous for the Town, the following considerations will be taken into account:

(i)            Any and all commodity purchases for which commodity price hedging    agreements will be appropriate, as determined by the Treasurer;

(ii)           If it is the opinion of the Treasurer that fixed costs and estimated costs of the Town will be reduced by virtue of the use of such an agreement;

(iii)          If it is the opinion of the Treasurer that the future price or cost to the Town of the applicable commodity will be lower or more stable than it would be without the agreement;

(iv)          If the commodity purchase include a detailed estimate of the expected result of using such an agreement;

(v)           If it is the opinion of the Treasurer that the financial and other risks to the Town that would exist with the use of such an agreement will be lower than the financial and other risks to the Town that would exist without such an agreement;

(vi)          If it is the opinion of the Treasurer that the agreement contains adequate risk control measures relating to such an agreement, such as,

1)       limited credit exposure based on credit ratings and/or on the degree of regulatory oversight and/or on the regulatory capital of the other party to the agreement;

2)       a standard agreement; or

3)       ongoing monitoring with respect to the agreement.

Reporting Requirements

The Treasurer shall report to Council at least once each fiscal year with respect to any and all commodity price hedging agreements in place.  The report shall contain, as a minimum, all requirements as set out in O. Reg. 653/05 or any amendments thereto.