O. Reg. 280/14: IESO: ELIGIBLE INVESTMENTS AND BORROWING

Link to law: http://www.ontario.ca/laws/regulation/r14280
Published: 2014-12-16

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ontario regulation 280/14

made under the

Electricity Act, 1998

Made: December 10, 2014
Filed: December 16, 2014
Published on e-Laws: December 16, 2014
Printed in The Ontario Gazette: January 3, 2015


IESO: Eligible Investments and Borrowing

Eligible investments

1. (1) The IESO may make investments when it considers the investment advisable for the sound and efficient management of its financial affairs.

(2) Despite subsection (1), where this Regulation provides for any restrictions upon the making of investments by the IESO, the IESO shall comply with those restrictions.

(3) The IESO may make investments in only the following types of securities:

1. Bonds, debentures, promissory notes and other evidences of indebtedness, issued or guaranteed by,

i. Canada or a province or territory of Canada, or

ii. an agency of Canada or of a province or territory of Canada.

2. Bonds, debentures, promissory notes and other evidences of indebtedness, issued or guaranteed by,

i. a municipality in Canada,

ii. a school board in Canada, or

iii. the Municipal Finance Authority of British Columbia.

3. Bonds, debentures, promissory notes, deposit receipts, deposit notes, certificates of deposit or investment, acceptances, commercial paper and similar instruments issued, guaranteed or endorsed by,

i. a bank listed in Schedule I, II or III to the Bank Act (Canada),

ii. a loan corporation or trust corporation registered under the Loan and Trust Corporations Act, or

iii. a credit union under the Credit Unions and Caisses Populaires Act, 1994.

4. Promissory notes and commercial paper, other than asset-backed securities, issued by a corporation that is incorporated under the laws of Canada or a province of Canada.

(4) The IESO shall not invest in a security described in paragraph 2, 3 or 4 of subsection (3) unless, at the time the investment is made by the IESO, the security has a minimum rating of,

(a) “R-1(mid)” or “AA(low)” by Dominion Bond Rating Service Limited;

(b) “Prime-1” or “Aa3” by Moody’s Investors Services Inc.; or

(c) “A-1+” or “AA-” by Standard and Poor’s. 

(5) Investments described in subsection (4) must have terms that provide that principal and interest shall be fully repaid no later than one year after the day the investment is made by the IESO.  

(6) Nothing in this section restricts the IESO’s authority to enter into contracts referred to in section 25.32 or 25.35 of the Act.

Ineligible investments

2. The IESO shall not do the following:

1. Invest in an investment that fails to satisfy the requirements of section 1.

2. Invest in a security that is expressed or payable in any currency other than Canadian dollars.

3. Enter into interest rate or currency exchange agreements, forward rate agreements or any other type of financial agreement to manage its financial assets, liability or risks, except those permitted by section 1.

Authorized borrowing

3. The IESO may borrow only for the following purposes:

1. To fund the payment of amounts payable by the IESO under sections 25.33 and 25.34 of the Act and any amounts payable under the regulations.

2. To provide such funds as may be necessary for the management of any variance account established and maintained under the Act by the IESO.

3. To provide such funds as may be necessary for the IESO to manage timing differences between the receipt of amounts and the payment of costs and expenses incurred by the IESO in exercising its rights and performing its duties under the Act.

4. To provide such funds as may be necessary for the IESO to manage timing differences between the receipt of payments in respect of procurement contracts that the IESO has entered into pursuant to Part II.2 of the Act and the payment of such amounts by the IESO under the procurement contracts referred to in that Part.

Statement of investment, borrowing and financial management policies and procedures

4. (1) On or before July 1, 2015, the board of directors of the IESO shall adopt a statement setting out the IESO’s investment, borrowing and financial management policies and procedures. 

(2) In preparing the statement, the board of directors shall bear in mind the timing considerations of the IESO’s investments and borrowings in relation to the IESO’s expected cash flow requirements. 

(3) The board of directors shall, on or before August 1, 2015, ensure that the statement does not contain any policy or procedure that would conflict with the requirements of sections 1, 2 and 3 and the board may resubmit the statement for that purpose and shall resubmit the statement in accordance with clause (4) (b) as necessary.

(4) The IESO shall submit to the Minister of Finance for approval,

(a) its proposed statement of investment, borrowing and financial management policies and procedures; and

(b) every change it proposes to make to its statement of investment, borrowing and financial management policies and procedures after the statement has been approved.

(5) The Minister of Finance may approve the proposed statement or change to the statement or refer it back to the IESO for further consideration.

(6) If the Minister of Finance does not approve the proposed statement or change to the statement and does not refer it back to the IESO for further consideration within 60 days of receipt, the Minister shall be deemed to approve the IESO’s proposed statement or change.

(7) The IESO shall comply with its statement of investment, borrowing and financial management policies and procedures as amended and as approved by the Minister of Finance in carrying out its investment, borrowing and financial management activities.

Revocation

5. Ontario Regulation 423/04 is revoked.

Commencement

6. (1) Subject to subsection (2), this Regulation comes into force on the later of January 1, 2015 and the day it is filed.

(2) Subsections 1 (2), (3), (4) and (5), sections 2 and 3, and subsection 4 (3) come into force on July 1, 2015.