HomeMy WebLinkAboutFIN 060-001 Commodity Price Hedging ProcedureCLI[' O�
PICKERING
City Procedure
Procedure Title: Commodity Price Hedging Procedure
Procedure Number:
FIN 060-001
Reference:
Date Originated:
April 28, 2010
Date Revised:
Approval: Chief Administrative Officer
Point of Contact: Director, Corporate Services &
Treasurer
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To provide procedures for the provision of Commodity Price Hedging Agreements
where applicable.
Procedure Objective
Index
01 Definitions
02 Delegation of Responsibilities
03 Procedure
01 Definitions
01.01 City - The Corporation of the City of Pickering.
01.02 Treasurer — the Chief Financial Officer and Treasurer of The
Corporation of the City of Pickering.
01.03 Authority — the Treasurer or designate.
01.04 Contract Agent - means an individual or organization acting on
behalf of the City as an independent contractor, external to the City
to provide advice on a price hedging strategy and/or to execute
agreements and transactions to acquire a Commodity.
01.05 Commodity means, whether in the original or a processed state,
an agricultural product, a forest product, a product of the sea, a
mineral, a metal, a hydrocarbon fuel, electricity, a precious stone or
other gem and other physical goods but does not include chattel
paper, a document of title, an instrument, money or securities.
01.06 Price Hedging Agreement — means a financial agreement to
provide price stability and/or minimize the cost, financial and other
risks associated with the procurement of a Commodity.
02 Delegation of Responsibility
The Treasurer, or designate, is authorized to enter into contracts for the purpose of
engaging a Contract Agent in accordance with the City's Purchasing Policy.
The Contract Agent will only be authorized to act within the scope of their specific authority
under any executed Contract and/or Agency Agreement with the City and shall, in
accordance with such a Contract or Agreement, provide services to the City.
03 Procedure
Any Commodity Price Hedging opportunities shall be submitted in writing, to the
Treasurer or designate, including an explanation and justification for the request. The
Treasurer for the City is the designated person responsible for administrative matters
pertaining to commodity price hedging. The Treasurer will:
a) determine whether a particular commodity price hedging agreement is
advantageous for the City;
b) determine if the request conforms to the Statement of Commodity
Price Hedging Policies and Goals;
c) determine if the request conforms to the definition of Commodity in
accordance with the Commodity Price Hedging Policy;
d) refer the request to a Contract Agent or appropriate City staff to
provide advice on a price hedging strategy and/or to execute
agreements and transactions to acquire the commodity;
e) delegate certain administrative duties and responsibilities to internal staff
and or external contract agents;
f) review any and all commodity purchases for which commodity price
hedging agreements will be appropriate;
ensure that either the financial position of the City will be enhanced by
virtue of the use of such an agreement or guarantee supply of the
commodity will be achieved by virtue of the use of such an agreement;
h) ensure that the all-inclusive contracted price and cost to the City of the
associated commodity will be lower or more stable than it would be
without the agreement;
g)
Procedure Title: Commodity Hedge Pricing Procedure Page 2 of 3
Procedure Number: FIN 060-001
i) evaluate the financial and other risks to the municipality that would
exist with the use of such an agreement and determine if such risk
would be lower than the financial and other risks to the municipality
that would exist without such an agreement;
use best judgment to determine that the agreement contains adequate
risk control measures;
k) ensure ongoing monitoring with respect to the commodity price
hedging agreements; and
j)
I) 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 Provincial Government requirements as set
out in legislation and regulations of the Municipal Act and contain the
following information and documents:
• a statement about the status of the agreements during the period of
the report, including a comparison of the expected and actual results of
using the agreements;
• a statement by the Treasurer that all of the agreements entered
during the period of the report are consistent with the municipality's
statement of policies and goals relating to the use of Commodity
Hedging Price Agreements; and
• such other information as Council may require.
Procedure Title: Commodity Hedge Pricing Procedure Page 3 of 3
Procedure Number: FIN 060-001