Invitation to Tender DETAILS Project: Economic Forecasting Services (2012-2014) AEMO Project Manager: Veronica Rodriguez Principal Economist, Energy Forecasting Australian Energy Market Operator Tel: 61 8 8201 7337 Email: veronica.rodriguez@aemo.com.au Closing Date: 20 October 2011 Validity Period: 30 days from the Closing Date Australian Energy Market Operator Limited ABN 94 072 010 327 Level 22, 530 Collins Street Melbourne VIC 3000 TEL: 03 9609 8000 FAX: 03 9609 8080 Invitation to Tender – Economic Forecasting Services (2012-2014) Table of Contents SECTION A: INVITATION TO TENDER ........................................................................................ 2 SECTION B: INFORMATION FOR TENDERERS ............................................................................ 3 SECTION C: ITT CONDITIONS .................................................................................................. 5 SECTION D: TENDER FORM .................................................................................................... 9 SCHEDULE 1 .......................................................................................................................... 11 SCHEDULE 2 .......................................................................................................................... 12 SCHEDULE 3 .......................................................................................................................... 13 SCHEDULE 4 .......................................................................................................................... 14 SCHEDULE 5 .......................................................................................................................... 15 SCHEDULE 6 .......................................................................................................................... 16 SCHEDULE 7 .......................................................................................................................... 18 SECTION E: PROJECT DESCRIPTION ..................................................................................... 19 SECTION F: CONTRACT TO BE EXECUTED ............................................................................. 25 Page 1 Invitation to Tender – Economic Forecasting Services (2012-2014) SECTION A: A.1 INVITATION TO TENDER Background AEMO, a company limited by guarantee, commenced operations on 1 July 2009, bringing together the functions formerly carried out by the following organisations: National Electricity Market Management Company (NEMMCO) Victorian Energy Networks Corporation (VENCorp) Electricity Supply industry Planning Council (ESIPC) Retail Energy Market Company (REMCO) (SA operations only, as of 1 October 2009) Gas Market Company (GMC) Gas Retail Market Operator (GRMO) AEMO’s functions include: Market and system operator of the National Electricity Market (NEM) in accordance with the National Electricity Rules; Managing the NEM and the retail and wholesale gas markets in eastern and southern Australia; Overseeing the system security of the NEM electricity grid and the Victorian gas transmission network; Economy-wide transmission planning, improving the operation of Australian energy markets; National transmission planning for electricity transmission networks; Provision of information to market participants and potential investors through the National Transmission Network Development Plan, as well as the annual Electricity Statement of Opportunities (ESOO) and Gas Market Statement of Opportunities (GSOO) to forecast longterm supply and demand; Overseeing Australian energy market governance in cooperation with the Australian Energy; Establishment of a short term trading market for gas; and Transmission planning for gas transmission networks in Victoria. With its broad national focus for the future, AEMO’s objectives are to promote efficient investment in and operation of Australia’s electricity and gas services for the long-term interests of consumers with respect to price, quality, safety, reliability and security of energy supply. AEMO’s head office is in Melbourne. A.2 Economic Forecast service AEMO publishes a number of planning reports containing energy consumption forecasts. In order for AEMO to prepare these publications, AEMO seeks the services of an expert consultant to provide economic forecasts using sound methodologies, the best available input data and appropriate assumptions. A.3 Invitation to Tender TENDERS ARE INVITED for the delivery of Economic Forecasting Services (2012-2014) particularly described in Section E. Page 2 Invitation to Tender – Economic Forecasting Services (2012-2014) SECTION B: B.1 INFORMATION FOR TENDERERS The Tenderer Must Inform Itself Prior to submitting a Tender, Tenderers must have informed themselves fully concerning the nature, extent and requirements of this ITT and the Project to be delivered, and made all examinations, investigations, interpretations, deductions and conclusions as to the costs, procedure and any difficulties in doing so. B.2 Queries Tenderers must address any queries to the AEMO Project Manager in electronic mail. B.3 Conditions of Tendering Tenderers must comply with Section C. B.4 Nature of ITT This ITT is an invitation to treat and is not intended to have any contractual effect. No contract will be entered into until a contract based on the document contained in Section F is entered into as contemplated by Section C17. B.5 Confidentiality This ITT contains confidential information about AEMO and its activities. It is provided to enable Tenderers to submit Tenders. Tenderers are not permitted to use any information contained in this ITT for any other purpose. Tenderers must take all reasonable steps (both physically and electronically) to protect the confidentiality of this ITT and all communications arising out of it, or the Tenderer’s submission of a Tender. B.6 Glossary Terms used in this ITT have the meanings given to them below, or in the Details: Addenda Any document issued after the date of this ITT and labelled as an “Addendum” to this ITT; collectively known as “Addenda”. AEMO Australian Energy Market Operator Limited ABN 94 072 010 327. References to AEMO include, where the context requires, AEMO’s employees, officers, contractors, consultants, advisers and other persons authorised to act for AEMO. Business Days A day other than Saturday, Sunday and any other day not taken to be a public holiday in Victoria. ITT / Invitation to Tender Is the collection of documents incorporating: Section A: Invitation to Tender Section B: Information for Tenderers Section C: ITT Conditions Section D: Tender Form Section E: Description of Project Section F: Draft Contract Page 3 Invitation to Tender – Economic Forecasting Services (2012-2014) and all schedules, attachments and appendices to those documents. GSOO Gas Statement of Opportunities. ESOO Electricity Statement of Opportunities. VAPR Victorian Annual Planning Report. SASDO South Australian Supply-Demand Outlook. NTNDP National Transmission Network Development Plan. Project The delivery of Economic Forecasting Services (2012-2014) more particularly described in Section E. Statement of Compliance The schedule in Section D by that title. Tender The offer submitted by a Tenderer to deliver the Project. Tenderer Any person in receipt of this ITT. Tender Period The time commencing between a Tenderer’s receipt of this ITT and the closing time for receipt of Tenders by AEMO. Page 4 Invitation to Tender – Economic Forecasting Services (2012-2014) SECTION C: ITT CONDITIONS C.1 Submitting a Tender (a) Lodgement Requirements A Tenderer must submit a Tender that meets the following requirements: The Tender must be completed (that is, Section D: Tender Form and all relevant schedules are completed) and signed (in the case of a body corporate, by a duly authorised officer), and all pages of the Tender initialled. A Tenderer must lodge a separate Tender Form for each Service offered. One electronic copy (CD) in Pdf or Excel format must be submitted in electronic mail to the AEMO Project Manager. The Tender must remain open for acceptance by AEMO for at least the Validity Period. Additional documentation may be submitted with their Tender if, in the Tenderers’ opinion, it is necessary for a proper understanding of their Tender. (b) Statement of Compliance The Tender Form and schedules have been developed to enable AEMO to evaluate tenders in accordance with the evaluation criteria detailed in Section C.9. If a Tenderer cannot comply with any element of the Tender Form or schedules, the Tenderer must specify in the Statement of Compliance the nature of, and reasons for, the non-compliance. Tenderers should note that a failure to comply with any of the lodgement requirements may lead to rejection of their Tender. C.2 Facsimile Tenders not Acceptable Tenders submitted by facsimile will not be accepted. C.3 Information Provided by AEMO Upon submission of their Tender, Tenderers are taken to have: carefully examined and satisfied themselves of the requirements of this ITT; examined all information relevant to the risks, contingencies and other circumstances relevant to the Project, as may be available by making reasonable enquiries; satisfied themselves as to the correctness and sufficiency of their Tender; and informed themselves of all matters and things necessary for the proper performance of any resulting contract to the extent that no charge in excess of, or in addition to, the prices tendered will be claimed from AEMO. Page 5 Invitation to Tender – Economic Forecasting Services (2012-2014) C.4 Disclaimer Except to the extent required by law, AEMO does not accept any responsibility to Tenderers or third parties, under the law of contract, tort (including negligence) or otherwise, for any loss or damage whatsoever that may arise from any information provided by AEMO. AEMO accepts no responsibility for any interpretation that may be placed on this ITT. The information contained in this ITT is furnished for the convenience of Tenderers. Any information provided by AEMO is not guaranteed and Tenders must be based on Tenderers’ own investigations and determinations. AEMO makes no warranties or representations on the contents, or adequacy, of any information provided to Tenderers. C.5 No Liability Except where it would be illegal to do so, AEMO is not liable in any way for the accuracy or completeness of this ITT, or liable for any loss or damage of whatever kind (whether foreseeable or not) however arising, suffered or incurred by any person in connection with this ITT (including by reason of any negligence, default or lack of care). C.6 Queries, Discrepancies or Errors If Tenderers find any discrepancy, error, or have any doubt as to the meaning or completeness of this ITT and they wish to clarify the discrepancy, error or doubt, they should notify the AEMO ITT Manager in writing at least 14 days before the Closing Date, whereupon AEMO may issue an Addendum clarifying the discrepancy, error, or query (as the case may be) in accordance with Section C.7. C.7 Addenda AEMO may issue an Addendum clarifying any matter contained in this ITT at any time not less than 5 Business Days prior to the Closing Date. AEMO will issue formally numbered Addenda to each Tenderer in identical form. No representation or explanation to Tenderers as to the meaning of this ITT, or as to anything to be done or not be done by the successful Tenderer will be taken to be included in this ITT unless it is contained in an Addendum. C.8 Tenders Commercial-in-Confidence Tenders will be treated as confidential and will not be disclosed outside AEMO unless it is: C.9 required by law, or in the course of legal proceedings; requested by any regulatory or other government authority having jurisdiction over AEMO, or its activities; or to AEMO’s external advisers, consultants or insurers. Tender Evaluation Without prejudice to AEMO’s right to reject non-conforming Tenders, during the tender evaluation process, AEMO may seek clarification from Tenderers of matters raised and rectification or resolution of errors or omissions in Tenders. Tenderers may be required to attend meetings with AEMO at a time and place to be notified by the AEMO Project Manager to review and discuss any such matters. The criteria to be used in the tender evaluation process may include, but will not be limited to: Page 6 Invitation to Tender – Economic Forecasting Services (2012-2014) quantitative and qualitative review of information provided in, and comparison of, Tenders; best value for money; capacity to deliver the Project; working methods and Tenderers’ track record in the delivery of similar projects; Tenderers’ personnel, resources, facilities and future serviceability capacity; Tenderer’s financial stability and any risks associated with a Tender; and any other factors AEMO considers to be relevant. AEMO may, in its absolute discretion, accept non-conforming Tenders provided that any departure from the requirements of this ITT is identified and fully described in the Statement of Compliance. C.10 AEMO not bound to proceed AEMO is under no obligation to proceed with, or accept any Tender, to complete the process outlined in this ITT or ultimately purchase any goods or services that comprise any part of the Project. C.11 No obligation to debrief AEMO is under no obligation to debrief any Tenderer as to AEMO’s evaluation of Tenders, or give any reason for the acceptance of or non-acceptance of any Tender. C.12 No Reimbursement for costs of tendering No Tenderer is entitled to be reimbursed for any expense or loss incurred in the preparation and submission of its Tender or for any costs incurred in attending meetings with AEMO during the tender evaluation process. C.13 Ownership of Tenders AEMO will retain and own all Tenders lodged as a result of this ITT. Apart from AEMO’s right to copy Tenders for the purposes of evaluation, Tenderers’ intellectual property rights in their Tenders are not affected by AEMO’s rights under this Section C13. C.14 Acceptance of Tender No Tender shall be taken to have been accepted by AEMO until notification of acceptance has been given in writing by AEMO to the successful Tenderer. C.15 No publicity Tenderers must not make any public or media announcement about this ITT or the outcome of this ITT without AEMO’s prior permission. C.16 No collusion or dealings with competitors Tenderers must ensure that they (and their principals, employees, agents and contractors) do not: (a) discuss this ITT with any other person they know has received this ITT or might reasonably be expected to have received this ITT; or Page 7 Invitation to Tender – Economic Forecasting Services (2012-2014) (b) engage in any conduct that is designed to, or might have the effect of, lessening competition in the supply to AEMO of the Project. Tenderers who wish to engage in legitimate teaming or sub-contracting discussions with persons who might deliver the Project must gain AEMO’s prior approval to do so. C.17 Contract to be executed AEMO proposes that the Project be delivered in accordance with a contract substantially in the form contained in Section F. Tenderers must not include their own standard or general conditions of contract with their Tenders. Tenderers who wish to propose any change to the proposed contract should include their comments in the Statement of Compliance and provide a copy of the document showing the exact change proposed by using the “Track Changes” function in Microsoft Word. Tenderers will be taken to have accepted the contract in its current form in Section F if Tenderers have failed to provide a copy of the contract marked in this way. AEMO requires the terms of the contract to be concluded and the document signed by the successful Tenderer within 14 days of AEMO’s notification of acceptance of the relevant Tender. Tenderers should note that AEMO reserves the right to reconsider rejected Tenders if the contract is not finalised in those 14 days. Page 8 Invitation to Tender – Economic Forecasting Services (2012-2014) SECTION D: TENDER FORM Economic Forecasting Services (2012-2014) To: AEMO Ltd Level 22, 530 Collins Street Melbourne VIC 3000 (“AEMO”) Tender From: Tenderer: ABN: Address: Contact Person: Name: Title: Telephone No: Facsimile No: E-mail: 1. Offer The Tenderer hereby tenders to provide the Project in accordance with the requirements of the ITT as specified in the Statement of Compliance in Schedule 1. The Tenderer must ensure the hard and electronic copy of its Tender are identical and agrees that AEMO may rely on either version when evaluating this Tender. 2. Agency/Joint Tender The Tenderer is/is not1 acting as agent or trustee for another person, or lodging a Tender jointly with other persons. (If the Tender is acting as an agent or trustee, full details must be provided in this section) 3. Experience in the Delivery of the Project The Tenderer provides in: 1 Schedule 2, details of its experience in the delivery of goods or services that are similar to the Project; Delete as appropriate. Page 9 Invitation to Tender – Economic Forecasting Services (2012-2014) 3 Schedule 3, details of the personnel (and their experience) the Tenderer intends to utilise in the delivery of the Project. Prices Should AEMO accept this Tender, the Tenderer acknowledges that the Tenderer will deliver the Project for the prices specified in Schedule 4. 4. Approach The Tenderer provides in Schedule 5 details of its approach to the delivery of the Project. 5. Conflicts of Interest The Tenderer provides in Schedule 6 a copy of declarations of any conflicts of interest by the personnel detailed in Schedule 3 and how they are to be addressed. 6. Validity Period This Tender and the offer it contains will remain open for acceptance by AEMO for the Validity Period. 7. Contract (optional) The Tenderer provides in Schedule 7 a copy of AEMO’s proposed contract with the Tenderer’s proposed changes in “track changes” mode. 8. Addenda to Tender Documents (only if Addenda received) In the preparation of its Tender, the Tenderer acknowledges having received the following Addenda, if any, to the Tender Documents: Addendum No. Dated Addendum No. Dated Addendum No. Dated NOTE: Capitalised terms in this Tender Form and Schedules are defined in the ITT. Dated this day of 201 EXECUTED by [NAME OF TENDERER] by its duly appointed representative in the presence of: ) ) ) ..............................................................…….. Witness ..............................................................…….. Chief Executive Officer ..............................................................…….. Name of witness (print) ..............................................................…….. Name of Chief Executive Officer (print) Page 10 Invitation to Tender – Economic Forecasting Services (2012-2014) SCHEDULE 1 STATEMENT OF COMPLIANCE I [Tenderer] confirm that this Tender conforms in every respect with the ITT. OR I [Tenderer] confirm that this Tender does not conform with the ITT in the following ways: 1. Tenderer's name _________________________________ Tenderer's signature _________________________________ Date _________________________________ Page 11 Invitation to Tender – Economic Forecasting Services (2012-2014) SCHEDULE 2 DETAILS OF EXPERIENCE Provide details of: 1. the Tenderer’s general background; 2. relevant experience, including particulars of previous contracts for the delivery of projects similar to the Project; and 3. details of referees AEMO may contact for the purpose of verification. Tenderer's name _________________________________ Tenderer's signature _________________________________ Date _________________________________ Page 12 Invitation to Tender – Economic Forecasting Services (2012-2014) SCHEDULE 3 PERSONNEL Name each person the Tenderer intends to employ in the delivery of the Project, including and any proposed subcontractors and detail their relevant experience. Tenderer's name _________________________________ Tenderer's signature _________________________________ Date _________________________________ Page 13 Invitation to Tender – Economic Forecasting Services (2012-2014) SCHEDULE 4 PRICES Tenderer's name _________________________________ Tenderer's signature _________________________________ Date _________________________________ Page 14 Invitation to Tender – Economic Forecasting Services (2012-2014) SCHEDULE 5 APPROACH Provide details of the Tenderer’s approach to the delivery of the Project. Tenderer's name _________________________________ Tenderer's signature _________________________________ Date _________________________________ Page 15 Invitation to Tender – Economic Forecasting Services (2012-2014) SCHEDULE 6 CONFLICTS OF INTEREST PART A: CONFLICTS OF INTEREST DECLARATION Each person proposed to be employed in the delivery of the Project should complete a declaration in the form below and submit it with the Tender. CONFLICTS OF INTEREST DECLARATION I, [name], of [address], [occupation]: 1. ACKNOWLEDGE that I am assisting [Tenderer] in the proposed delivery of the Project to AEMO (“the Project”). 2. DECLARE that I am not a member, employee or member of staff of the Australian Energy Regulator, or the Australian Energy Market Commission. 3. DECLARE that, to the best of my knowledge, information and belief2, I do not have: (a) any interest3 in a Registered Participant4, or other person, company or business who might be affected by the Project; (b) any immediate relatives5 with a financial interest in a Registered Participant, or other person, company or business who might be affected by the Project; (c) any personal bias6 or inclination that would in any way affect my contribution to the Project; (d) any personal obligation, allegiance or loyalty that would in any way affect my contribution to the Project; (e) any engagement by a Registered Participant or other person, company or business that could in any way compromise or otherwise affect my contribution to the Project; (f) any other concern that could in any way compromise or otherwise affect my contribution to the Project, (collectively called a “conflict”), 2 You are expected to complete this Declaration based on your current knowledge, information and belief; you are not required to make further inquiries. 3 Defined in the Rules as either being a director, employee or partner in a Registered Participant, or of any related body corporate of a Registered Participant, or any direct or indirect financial interest (whether as shareholder, partner or other equity participant) in any Registered Participant or a related body corporate of a Registered Participant, other than an interest of less than 0.1% of the net shareholders funds of that entity (as determined on the date the declarant is appointed). 4 A list of Registered Participants is available on AEMO’s website: www.aemo.com.au. 5 Defined as a spouse (whether it be de facto or de jure), or child. 6 Potential issues include whether you have a relative or close friend who is a senior executive for a Registered Participant, or other person, company or business affected by the Project. Page 16 Invitation to Tender – Economic Forecasting Services (2012-2014) EXCEPT FOR THE FOLLOWING: Person Affected Nature of Conflict I UNDERTAKE to make a further declaration detailing any conflict, potential conflict or apparent conflict that may arise during the Project. Signed ...................................................................... Dated .......................................... PART B: HOW EACH CONFLICT IS TO BE ADDRESSED The Tenderer must outline how any conflicts of interest identified in the various Declarations submitted with the Tender are to be addressed. Page 17 Invitation to Tender – Economic Forecasting Services (2012-2014) SCHEDULE 7 PROPOSED CONTRACT CHANGES Page 18 Invitation to Tender – Economic Forecasting Services (2012-2014) SECTION E: E.1 PROJECT DESCRIPTION Purpose Economic, demographic and energy price forecasts, for different scenarios, to be used in developing electricity and gas consumption forecasts. E.2 Description of Project The economic consultant is required to produce three sets of economic forecasts, including national, state and industry sector economic forecasts, and demographic and energy price forecasts, over the following horizons: 2012 economic forecasts: 2011/12 2033/34 (1 July to 30 June, financial year) 2013 economic forecasts: 2012/13 2034/35 (1 July to 30 June, financial year) 2014 economic forecasts: 2013/14 2035/36 (1 July to 30 June, financial year) The Consultant is also required to produce an annual report detailing the approach and outcome of the economic forecasting process, along the lines of the Stage 2 economic report published with the 2011 ESOO7. In addition to the above, AEMO requests the consultant includes optional services to: Produce additional sets of economic forecasts, for alternative scenarios, a part of the annual service Produce an update to the “base” economic forecast six months after delivery of the annual service Some important specifications for the economic forecasting service are as follows: Historical data must be provided on a quarterly and annual basis from the 2000/01 financial year. Forecast data must be provided on a annual basis and, if possible, on a quarterly basis Historical data needs to include the latest Australian Bureau of Statistics release (the annual service will need to include the most recent July-September quarter data) The specific economic variables required consist of standard macroeconomic variables as output from the consultant’s models as well as certain “other variables”, defined by AEMO (refer to Table 4), that may require the development of additional specific models The required variables are subject to an annual review annual basis The report should include specifications for all newly-developed models to allow AEMO to replicate any forecasts that are based on any of these models The deadline for delivery of the annual service is the first week of March each year E.3 Report specifications The report must include a detailed description of the methodological approach and data sources used in developing the forecasts to demonstrate the robustness of the approach. To provide greater clarity, AEMO requires a detailed commentary and analysis of the forecasts provided particularly around forecasts of manufacturing sub-sectors by state. Additionally, a commentary of long-run and short-run effects of different variable changes should be discussed. 7 http://www.aemo.com.au/planning/0410-0074.pdf Page 19 Invitation to Tender – Economic Forecasting Services (2012-2014) AEMO expects the consultant to deliver a draft set of economic forecasts and report, for AEMO to review, and then a final set of economic forecasts and report, addressing all of AEMO’s comments. E.4 Scenarios The economic forecasts are to be produced for a minimum of three scenarios, labelled as high, medium and low scenarios according to the specification set out in Table 3. TABLE 3: SCENARIO SPECIFICATION SCENARIO HIGH LEVEL DESCRIPTION High Medium (“Base”) High economic and population growth, and X carbon price Medium economic and population growth, and X carbon price Low Low economic and population growth, and X carbon price The ‘Medium’ scenario should be the most likely forecast of Australian economic growth at the time the economic forecasts are produced. Agreement on the definition of high and low economic growth will need to occur upon project commencement, in consultation with AEMO, to ensure a spread of outcomes. For each state, the year by year economic growth rates and the long run equilibrium economic levels should be clearly differentiated between each core scenario. This implies that the long run drivers of each scenario assume extreme values, compared to the medium scenario, and are not restricted to a reasonable bounds sensitivity analysis. AEMO may require the consultant to provide the optional service of economic forecasts for additional scenarios. An example of an additional scenario may be medium economic and population growth, but without a carbon price. The variables required to be forecast are listed in Section E5. E.5 Forecast variables The variables required to be forecast are classified into three groups: A group of variables defined at both the national and state/territory levels; A group of variables defined only at the national levels; and A group of variables for the energy market only at the state/territory level. All monetary values in this table should be delivered in “real” and “nominal” dollars, consistent with the body that releases the official data, such as ABS, RBA or other, unless otherwise stated. The forecasts for real variables should identify the applicable base year. National and State variables Demographic variables MEASURE Population Working age population Net overseas immigration Number of households COVERAGE Australia Australia Australia Australia UNIT 000’s persons 000’s persons 000’s persons 000’s persons Page 20 Invitation to Tender – Economic Forecasting Services (2012-2014) Labour market variables MEASURE Employment Participation rate Unemployment rate Wages, salaries and supplements National accounts variables (real) MEASURE GDP/GSP Private consumption Private dwelling investment Private non-dwelling construction investment Private equipment investment Government consumption Domestic/State Final demand Overseas exports Overseas imports Business investment Macro price variables MEASURE GDP/GSP deflator Consumer Price Index (CPI) Producer Price Index (PPI) COVERAGE Australia Australia Australia Australia UNIT 000’s persons % % $ COVERAGE Australia Australia Australia UNIT $ million $ million $ million Australia Australia Australia Australia Australia Australia Australia $ million $ million $ million $ million $ million $ million $ million COVERAGE Australia Australia Australia UNIT Index Index Index Sectoral Gross Domestic/State Product variables (real) MEASURE COVERAGE Agriculture, forestry and fishery Australia Mining Australia Food beverage and tobacco Australia Textile clothing, footwear and leather Australia Wood and paper products Australia Printing publishing and recorded media Australia Petroleum, coal and chemical Australia Non-metallic mineral products Australia Metal products Australia Machinery and equipment Australia Electricity, gas and water Australia Construction Australia All services Australia UNIT $ million $ million $ million $ million $ million $ million $ million $ million $ million $ million $ million $ million $ million National variables Labour income related variables MEASURE Average earnings Average rate of tax on labour income Gross national expenditure COVERAGE Australia UNIT $ Australia Australia Ratio $ million Page 21 Invitation to Tender – Economic Forecasting Services (2012-2014) Trade sector oriented variables MEASURE Terms of trade Balance on current account COVERAGE Australia Australia UNIT Index % of GDP Interest rates MEASURE 90-day bill rate 10-year bond rate Standard variable mortgage rate COVERAGE Australia Australia Australia UNIT % p.a. % p.a. % p.a. Exchange rates MEASURE Euro exchange rate US dollar exchange rate COVERAGE Australia Australia UNIT Ratio Ratio Energy market variables (customised variables) Energy price variables8 Residential electricity prices Business electricity prices Total electricity prices Electricity price index Total gas prices Residential gas prices Business gas prices Gas & other household fuels price index State/territory State/territory State/territory State/territory State/territory State/territory State/territory State/territory c/kWh c/kWh c/kWh Index Index and price forecast Index and price forecast Index and price forecast Index For clarity, the requirement for historical and forecast electricity prices refers to average retail prices rather than energy/pool prices. Forecast coverage includes 7 Australian regions: New South Wales (including the Australian Capital Territory), Victoria, Queensland, Western Australia, South Australia, Tasmania and the Northern Territory. E.6 Technical appendix, data sets and estimation results A technical appendix should be provided, including a complete comprehensive description of the methodological approach, assumptions, and potential impacts of the variables on energy demand used in developing the forecasts. The inclusion of relevant/additional information useful to demonstrate/support the robustness of the approach, incorporating graphics, text and tables for each state and territory over the forecast period is also required. Descriptions of manufacturing sector output forecasts must relate each forecast to the historical development of that sector’s output and any significant changes caused by single large projects, government policies or other factors. The report should include specifications for the specific non-standard models, so that the forecasts produced by these models can be replicated by AEMO. 8 Electricity prices refer to average retail prices rather than energy pool prices. Page 22 Invitation to Tender – Economic Forecasting Services (2012-2014) Historical data used in the forecasting calculations should be delivered to AEMO on an electronic appendix in Microsoft Excel format. It is required to specify the data sources and the periodicity/data frequency of each set of variables. The appendix should include the complete database of all historical and forecast values, along with the estimation and specifications of customised variables equations. A description of each variable is required in order to facilitate the interpretation of each set of estimation results. E.7 Consultation Consultation with AEMO stakeholders will be necessary to further understanding of the key issues which need to be addressed. Internal stakeholders will include AEMO Project Manager and other AEMO staff. At the commencement of the project, the economic forecast service provider together with AEMO will undertake a project initiation meeting to establish how the process will be implemented and managed. This will include confirmation of the time table, the deliverables, the communication channels and the clear discussion of AEMO’s expectations. A project plan detailing key dates for circulation of progress meetings, draft results, receipt of comments and final reports is to be developed by the consultant by the first week of December each year to ensure appropriate resources for this process are assigned by AEMO and its stakeholders well ahead of time. The economic service provider should take and provide minutes to AEMO within one week from meetings. The economic forecast service provider must support a review of progress by participating in regular consultation with AEMO during the progress. A first review of the report by AEMO and state/territory representatives will be undertaken at the draft stage, so that all comments and questions raised as a result of the review can be addressed in a timely manner. The identification of policies and projects to be included as assumptions in the forecast should be undertaken in consultation with AEMO. The need for quantification of the effects of policies and the degree of any quantification should also be decided in consultation with AEMO. E.8 Timetable Table 5 shows the delivery timetable for the economic forecasting service provider. TABLE 5: DRAFT DELIVERY TIMETABLE FOR THE 2012 SERVICE Deliverables Draft Dates (2012 annual service) Project plan 1 December 2011 Kick off meeting 7 December 2011 Meeting to discuss progress 1 February 2012 Draft economic forecasts and report 17 February 2012 Feedback meeting 28 February 2012 Final economic forecasts and report 9 March 2012 AEMO requires the delivery of key inputs by the specific dates given in the above table to provide sufficient time for each jurisdictional energy demand forecaster to develop a range of regional energy demand forecasts. This is crucial as any delay may result in further delay in the process of developing regional electrical energy and demand projections for the ESOO and this in turn will affect the entire ESOO process. Page 23 Invitation to Tender – Economic Forecasting Services (2012-2014) E.9 Publication of reports AEMO will publish the reports on its website in August 2012. Therefore, the reports should not contain any confidential information. AEMO will consider the use of confidential addendums for the inclusion of any confidential information. The confidential addendums will be disclosed to state/territory government representatives and AEMO (including their consultants) on a confidential basis, but will not be published. Page 24 Invitation to Tender – Economic Forecasting Services (2012-2014) SECTION F: CONTRACT TO BE EXECUTED AEMO Std Consultancy Agrt - Economic Forecasting Services - November 2011.docx Page 25