Invitation to Tender. Audit Related Services DETAILS

Transcription

1 Australian Energy Market Operator Ltd ABN Invitation to Tender Audit Related Services DETAILS AEMO ITT Manager: Emma Clarke, Manager Risk, Audit & Compliance Level 22, 530 Collins Street, MELBOURNE VIC 3000 (03) Closing Date: 4pm (EST) 18 September 2015 Validity Period: 150 days from the Closing Date Australian Energy Market Operator Limited Level 22, 530 Collins Street MELBOURNE VIC 3000 TEL: FAX:

2 Table of Contents SECTION A: INVITATION TO TENDER... 2 SECTION B: INFORMATION FOR TENDERERS... 3 SECTION C: ITT CONDITIONS... 5 SECTION D: SERVICES OVERVIEW... 8 SECTION E: MARKET AUDIT SERVICES GAS MARKET SECTION F: MARKET AUDIT SERVICES NEM SECTION G: METERING AUDIT & RELATED SERVICES SECTION H: INTERNAL AUDIT SERVICES SECTION I: CONTRACT TO BE EXECUTED SECTION J: TENDER FORM SCHEDULE SCHEDULE SCHEDULE SCHEDULE SCHEDULE SCHEDULE SCHEDULE Page 1

3 SECTION A: INVITATION TO TENDER A.1 Background The Australian Energy Market Operator (AEMO) is a company limited by guarantee. The members of AEMO are comprised of two groups: the states of Queensland, New South Wales, Victoria, Tasmania and South Australia and the Australian Capital Territory, the Commonwealth; and Industry members. AEMO undertakes the day-to-day management of wholesale and retail energy market operations, operates the electricity power system on the eastern seaboard and the Victorian gas declared transmission system. AEMO also performs ongoing market development and long-term system planning. AEMO s functions include: Market and system operator of the National Electricity Market (NEM) in accordance with the National Electricity Rules (NER); Operator of a number of retail gas markets in eastern and southern Australia in accordance with the National Gas Rules (NGR); Market and system operator of the Victorian wholesale gas market in accordance with the NGR; Operation of short term trading markets for gas in accordance with the NGR; National transmission planning for electricity transmission networks. 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 with offices in Brisbane, Sydney and Adelaide. A.2 Invitation to Tender AEMO intends to appoint auditors to perform the following types of audit services from 1 July 2015 for a period of 3 years, with two options for AEMO to extend for a further twelve months: Market Audit Services - Gas Market Audit Services - NEM. Metering Audit Services. Internal Audit Services. TENDERS ARE INVITED for the delivery of one or more Services. Page 2

4 SECTION B: INFORMATION FOR TENDERERS B.1 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 Services 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 If Tenderers have any queries or 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 by to the address shown in the Details at least 10 Business Days before the Closing Date, whereupon AEMO will issue an Addendum clarifying the query, discrepancy, or error (as the case may be) in accordance with Section B.6. 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 I is entered into as contemplated by Section C4. 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 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 publish formally numbered Addenda on AEMO s website at any time prior to that date. 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 this ITT or an Addendum. B.7 Glossary Italicised terms in this ITT are as defined in the relevant regulatory instrument, be it the NER, NGR or RMP, as the context requires. Capitalised terms used in this ITT have the meanings given to them below, or in the Details: Addendum AEMO Business Days Any document issued after the date of this ITT and labelled as an Addendum to this ITT; collectively known as Addenda. Australian Energy Market Operator (ABN ), and references to AEMO include, where the context requires it, references to AEMO s employees, officers, contractors, consultants, advisers and other persons authorised to act for AEMO. A day other than Saturday, Sunday and any other day not taken to be a public holiday in Victoria. Page 3

5 Internal Audit Services The services more particularly described in Sections D & H. ITT or Invitation to Tender Is the collection of documents incorporating: Section A: Invitation to Tender Section B: Information for Tenderers Section C: ITT Conditions Sections D-H: Services Overview Section E: Gas Market Audit Services Section F: NEM Audit Services Section G: Metering Audit Services Section H: Internal Audit Services Section I: Draft Contract Section J: Tender Form and all schedules, attachments and appendices to those documents. Market Audit Services - Gas The services more particularly described in Sections D & E. Market Audit Services - NEM The services more particularly described in Sections D & F. Metering Audit Services The services more particularly described in Sections D & G. NEM NER NGR Review RMP Services Statement of Compliance Tender National Electricity Market. National Electricity Rules. The expression NER followed by a number refers to a clause number in the NER. National Gas Rules. The expression NGR followed by a number refers to a clause number in the NGR. As defined in the Auditing Standard AUS 106 Explanatory Framework for Standards on Audit and Audit Related Services. Retail Market Procedures. The abbreviation in the brackets refers to the state/territory to which they apply. The expression RMP(X) followed by a number refers to a clause number in the relevant RMP. Market Audit Services Gas, Market Audit Services NEM, Metering Audit Services and Internal Audit Services. Each referred to as a Service. The schedule in Section J by that title. The offer submitted by a Tenderer to deliver one or more of the Services. Tender Form The documents that make up Section J. Tender Period Tenderer The time commencing between a Tenderer s receipt of this ITT and the closing time for receipt of Tenders by AEMO. Any person in receipt of this ITT. Page 4

6 SECTION C: ITT CONDITIONS C.1 Submitting a Tender (a) Lodgement Requirements A Tender submitted in response to this ITT must meet the following requirements: The Tender must be submitted using the Tender Form, which must be completed as instructed. The Tender must be signed (in the case of a body corporate, by a duly authorised officer), and all pages of initialled. One original and two copies of all Tenders from the one Tenderer (in hard copy) and one electronic copy (USB) in Word or Excel format must be submitted in a sealed envelope and placed in the Tender Box at either the following address by 4:00 pm on the Closing Date: TENDER BOX Audit Related Services Australian Energy Market Operator Ltd Level 22, 530 Collins Street MELBOURNE VIC 3000 Alternatively, Tenderers may their Tender to the following address: tenderbox@aemo.com.au 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) One Tender per Service Tenderers must lodge a separate Tender Form for each Service offered, and may submit more than one Tender for each Service. (c) Statement of Compliance The Tender Form has been developed to enable AEMO to evaluate tenders in accordance with the evaluation criteria detailed in Section C.6. 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 Services, 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

7 C.4 No Warranty of Accuracy To the extent required by law, AEMO: is not liable in any way for the accuracy, adequacy or completeness of this ITT, or for any loss or damage whatsoever (whether foreseeable or not) however arising, suffered or incurred by any person in connection with this ITT or any information provided by AEMO under the law of contract, tort (including negligence, default or lack of care) or otherwise; and makes no warranties or representations as to the adequacy or completeness of this ITT or any interpretation that may be placed by Tenderers on the ITT or that information. Tenders must be based on Tenderers own investigations, assessments and determinations. C.5 Tenders Commercial-in-Confidence Tenders will be treated as confidential and will not be disclosed outside AEMO unless it is: 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. C.6 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 ITT 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: best value for money; efficiency and productivity; consideration of impact on AEMO; approach and methodology; quantitative and qualitative review of information provided in, and comparison of, Tenders; capacity to deliver the audit services; energy industry knowledge and experience; innovation in the delivery of the audit services; working methods and Tenderers track record in the delivery of similar services; 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.7 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 Services. C.8 No Obligation to Debrief Page 6

8 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.9 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.10 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 C.10. C.11 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.12 No Collusion or Dealings with Competitors Tenderers must ensure that they (and their principals, employees, agents and contractors) do not: (a) (b) discuss this ITT with any other person they know has received this ITT or might reasonably be expected to have received this ITT; or engage in any conduct that is designed to, or might have the effect of, lessening competition in the supply to AEMO of the Services. Tenderers who wish to engage in legitimate teaming or sub-contracting discussions with persons who might deliver the Services must gain AEMO s prior approval to do so. C.13 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.14 Contract to be Executed AEMO proposes that the Services be delivered in accordance with a contract substantially in the form contained in Section J. 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 J 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 30 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 7

9 SECTION D: SERVICES OVERVIEW D.1 No Guarantee of Work Although AEMO will be entering into contracts for the successful Tenderer to undertake work that is cyclic in nature, the volume of work will be determined by AEMO in its absolute discretion. There is no guarantee of minimum work in any year or over the term of the proposed contract. The work may be offered individually or as a package. Tenderers may offer pricing for Services on an individual Service and as a package or volume discounts to reflect any cost efficiencies they consider relevant. D.2 Service Plan After consultation with AEMO s relevant business areas, the successful Tenderer is expected to propose a Service plan in accordance with the terms of the proposed contract, which will include the timing of field visits and provision of various reports and participation in meetings with AEMO. Discussions with AEMO to settle the content of a Service plan may include discussions with management and AEMO s Risk and Audit Committee. Prior to commencing any fieldwork, the successful Tenderer is expected to submit its Service plan to AEMO for approval and then conduct the Reviews in accordance with that plan and present its reports to AEMO and participate in meetings with AEMO as required. The type of Review to be conducted will be agreed by AEMO in consultation with the successful Tenderer. Tenderers should allow for the possibility that Service requirements can vary over the life of the contract. D.3 Period to be covered by Service Plans Service plans for Internal Audit Services must cover the following three years and must be prepared with focus on the following: The efficiency and effectiveness of the department and business areas and on service delivery areas; Effectiveness of implementation and operation of internal controls; The completeness, accuracy and reliability of information and source records and data; and The extent of compliance with relevant laws, rules, regulations, policies and procedures. All other Service plans must cater for the next 12 months. D.4 Compliance with Australian Auditing Standards Reviews are to be conducted in accordance with Australian Auditing Standards agreed with AEMO (depending on the context), which include (without limitation): Standard on Assurance Engagements ASAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information; Standard on Related Services ASRS 4400 Agreed-Upon Procedures Engagements to Report Actual Findings; and Standard on Assurance Engagements ASAE 3100 Compliance Engagements. D.5 General Requirements (a) Scope The scope of each Service is detailed as follows: Market Audit Services Gas (see Section E) Market Audit Services of NEM (see Section F) Metering Audit Services (see Section G) Page 8

10 (b) (c) (d) Internal Audit Services (see Section H) Fieldwork To improve the efficiency and planning of workload and to ensure that higher risk activities are monitored more closely, AEMO expects the successful Tenderer to spread field visits throughout each year, rather than leaving them to the end of each contract year. Reports In addition to any content that is prescribed by the NER, NGR, RMP, or any applicable Australian Auditing Standard, all reports provided by the successful Tenderer must contain the following: Follow-up The area/process under review A summary of findings A list of issues identified during the review with an analysis of each issue including the allocation of a risk rating to each issue in accordance with AEMO s risk management framework Recommendations and advice to resolve each identified issue AEMO management comments in response and actions to resolve each identified issue The successful Tenderer will be responsible for maintaining an outstanding action list and providing regular updates (typically quarterly) to AEMO on progress against those outstanding actions and identifying when recommendations have been implemented. D.6 Supplementary Information Additional information that Tenderers may find of assistance includes the following: The AEMO website contains information on the operations of AEMO, its governance and board structure, copies of recent AEMO publications, policies and procedures, including RMPs, and metering services etc. The AEMO website is at The NER and NGR can be found on the Australian Energy Market Commission website at D.7 Compliance Management System AEMO has implemented a compliance management system and has identified the material obligations for each of the areas that are the subject of this Invitation to Tender (with the exception of the Internal Audit Services). The approximate number of compliance obligations for each Service are set out in the table below. This is not indication of the complexity of each obligation but gives an indication of AEMO s day-to-day focus areas in compliance. Gas Retail Market Procedures - NSW & ACT 160 Gas Retail Market Procedures - QLD 70 Gas Retail Market Procedures - SA 120 Gas Retail Market Procedures - VIC 50 National Electricity Rules 550 Short Term Trading Market 180 Victoria Wholesale Gas Market 150 Page 9

11 D.7 Summary of Services Service Deliverable Statutory Requirement Review Cycle Type of Service Report or Contents to be made available outside AEMO? Market Audit Services - Gas Victorian Wholesale Gas Market NGR 322 At least annually Review Yes Victorian Retail Gas Market RMP (VIC) 1.7 Biennially Review Yes Queensland Retail Gas Market RMP(Q) 1.7 Biennially Review Yes South Australia Retail Gas Market RMP(SA) 351 Biennially Review Yes NSW/ACT Retail Gas Market RMP(NSW/ACT) 38 Biennially Review Yes Victorian Gas Safety Case No less than biennially Independent Validation Yes B2B Gas Hub Biennially Review Yes STTM NGR 496 Annually Review Yes Market Audit Services NEM NEM NER No less than annually Review Yes Settlements Residue Auction NER Biennially Review Yes Metering Audit Services Accredited Agent Services Ad Hoc Yes Metering Data Provider Reviews Annually Review Yes Metering Provider Reviews Biennially Review Yes Internal Audit Services Internal Audit Annually Review No The frequency of reviews, and the type of reviews to be undertaken, will be confirmed by AEMO. 1 Settlements Residue Auction is within the scope of market audits, but there is no requirement that it be reviewed annually. Page 10

12 SECTION E: MARKET AUDIT SERVICES GAS MARKET E.1 Victorian Wholesale Gas Market Audit (a) Background/Scope Under NGR 322, AEMO is required to appoint an independent and suitably qualified market auditor to carry out reviews of matters AEMO considers appropriate including, without limitation, reviews of: the calculations and allocations performed by AEMO s metering and settlements systems; billing and information systems; the scheduling and pricing processes; processes for software management; the linepack account; and AEMO s compliance with NGR Part 19. The audit of the Victoria Wholesale Gas Market requires a review of general IT controls. There are a range of procedures that support AEMO s operation of the Victoria Wholesale Gas Market. These can be viewed on AEMO s website Procedures/Declared-Wholesale-Gas-Market-Rules-and-Procedures. The auditor must prepare a report in which the results of the Review are set out. This report must be published on the AEMO website. E.2 Victorian Retail Gas Market Audit (a) Background/Scope Under RMP(V) 1.7, AEMO must arrange for a review to be conducted at least every second year by an independent and suitably qualified market auditor. The Review must examine AEMO s compliance with its processes and the effectiveness and appropriateness of systems utilised in the operation of any activities as set out in or contemplated by the RMP(V), including, but not limited to: AEMO s compliance processes and compliance with the procedures; IT controls, including software management and business continuity Integrity of the meter register Profiling and allocation processes and systems Retail billing and information systems The auditor must prepare a report in which the results of the Review are set out. This report must be published on the AEMO website and made available by AEMO to Participants on request. There are a range of procedures that support AEMO s operation of the Victoria Retail Gas Market. These can be viewed on AEMO s website Procedures/Retail-Gas-Market-Procedures. The auditor must prepare a report in which the results of the Review are set out. This report must be published on the AEMO website. Page 11

13 E.3 Queensland Retail Gas Market Audit (a) Background/Scope Under RMP(Q) 1.7, AEMO must arrange for a review to be conducted at least every second year by an independent market auditor. The Review must examine AEMO s compliance with its processes and the effectiveness and appropriateness of systems utilised in the operation of any activities as set out in or contemplated by the RMP(Q), including, but not limited to: AEMO's compliance with the RMP(Q); IT controls, including software management and business continuity; Integrity of the meter register; Profiling processes and systems; and Retail billing and information systems (balancing process). The auditor must prepare a report in which the results of the Review are set out. This report must be published on the AEMO website and made available by AEMO to Participants on request. The Queensland Retail Gas Market procedures can be viewed on AEMO s website The auditor must prepare a report in which the results of the Review are set out. This report must be published on the AEMO website. E.4 South Australian Retail Gas Market Audit (a) Background/Scope Under RMP(SA) 351, AEMO must arrange for a review to be conducted at least every second year by an independent market auditor. The Review must examine AEMO s compliance with its processes and the effectiveness and appropriateness of systems utilised in the operation of any activities as set out in or contemplated by the RMP(SA), including, but not limited to: AEMO's compliance processes and compliance with the RMP(SA); IT controls, including software management and business continuity; Integrity of the metering register; Profiling and allocation processes and systems; and Retail billing and information systems. The auditor must prepare a report in which the results of the Review are set out. This report must be published on the AEMO website and made available by AEMO to Participants, pipeline operators and prescribed persons on request. The South Australia Retail Gas Market Procedures can be viewed on AEMO s website The auditor must prepare a report in which the results of the Review are set out. This report must be published on the AEMO website. E.5 NSW & ACT Retail Gas Market Audit (a) Background/Scope Under RMP(NSW & ACT) 38.5, AEMO must arrange for a review to be conducted at least every second year by an independent market auditor. Page 12

14 The Review must examine AEMO s compliance with its processes and the effectiveness and appropriateness of systems utilised in the operation of any activities as set out in or contemplated by the RMP(NSW&ACT), including, but not limited to: AEMO's compliance processes and compliance with the RMP(NSW/ACT); IT controls, including software management and business continuity; Integrity of the metering register; Profiling and allocation processes and systems; and Retail billing and information systems. The auditor must prepare a report in which the results of the Review are set out. This report must be published on the AEMO website and made available by AEMO to Participants on request. The New South Wales and Australian Capital Territory Retail Gas Market Procedures can be viewed on AEMO s website Market-Procedures. The auditor must prepare a report in which the results of the Review are set out. This report must be published on the AEMO website. E.6 Gas Safety Case Validation (a) Background/Scope E.7 Gas B2B Hub Review (a) AEMO is a gas company under the Gas Safety Act (Vic) Under section 37 of that Act AEMO is required to submit a safety case to Energy Safe Victoria (ESV) at the end of each fiveyear period commencing with the last acceptance of the Safety Case, or when developments in technology, the facility or the safety management system significantly impact the safety risk profile. AEMO must satisfy ESV that each person undertaking the validation of a matter has the necessary competence and ability and access to information on the matter to arrive at an independent opinion on the matter. Under section 38, ESV may require AEMO to obtain an independent validation of the safety case or any part of the safety case. In addition AEMO may request periodic reviews of the hazard register to consider changes to the operating environment and events occurred over past as months, anticipate changes in the next 12 months, and findings from exercises and audits that may impact on the Safety Case. Background/Scope The Full Retail Contestability (FRC) Hub supports the flow of transactions, such as customer transfers, service orders and metering information between gas retail and distribution businesses and AEMO. AEMO is responsible for the infrastructure to offer business-to-business (B2B) and Business to Market (B2M) services to the retail gas markets in South Australia, Western Australia and Victoria. AEMO is responsible for managing the overall activities of the FRC Hub and provision of services to FRC Hub users. The successful tenderer will provide assurance to the FRC Hub users and participants on whether AEMO has provided services in accordance with relevant terms and conditions. Focus areas include (without limitation): Certification process; Page 13

15 Security management of data; General IT Controls Change management; Business continuity processes; and Operational management of Hub functions. The review of the Gas B2B Hub is undertaken periodically, typically every second year. The auditor must prepare a report in which the results of the Review are set out. This report must be published on the AEMO website E.8 Short Term Trading Market Audit (a) Background/Scope Under NGR 496, AEMO is required to appoint an independent and suitably qualified market auditor to carry out an annual review of the STTM. The review must examine compliance by AEMO with its processes and the effectiveness and appropriateness of systems utilised in the operation of the STTM, including (without limitation): the calculations and allocations performed by the settlements systems; billing and information systems; the scheduling and pricing processes; processes for software management and business continuity; and AEMO's compliance with NGR Part 20. AEMO must establish the scope of each annual review after consultation with trading participants. The auditor must prepare a report in which the results of the Review are set out. This report must be published on the AEMO website The Short Term Trading Market Procedures support AEMO s operation of that market. The Procedures can be accessed on AEMO s website Procedures/Short-Term-Trading-Markets. Page 14

16 SECTION F: MARKET AUDIT SERVICES NEM F.1 NEM Market Audit (a) Background/Scope Under NER , AEMO is required to appoint an independent market auditor to carry out an annual review of matters AEMO considers appropriate including, without limitation, reviews of the: calculations and allocations performed by the metering system and settlements system; billing and information systems; scheduling and dispatch processes; processes for software management; and AEMO procedures and their compliance with the NER. The successful Tenderer should assume that the National Electricity Market Dispatch Engine (NEMDE) module operating in the live environment has been certified by an independent expert and for any significant change to the NEMDE during the audit period an updated certificate will be provided. The auditor must prepare a report in which the results of the Review are set out. This report must be published on the AEMO website. A range of procedures support AEMO s operation of the National Electricity Market. These can be viewed on AEMO s website The report for the audit of the National Electricity Market for can be viewed here F.2 Settlements Residue Auction Review (a) Background/Scope AEMO runs the settlements residue auction (SRA) in accordance with NER The SRA systems operate on the same IT systems and control environment as the NEM. It is, therefore, reasonable to assume that one of the outcomes of an SRA Review will include a report on the control and IT environments relating to the SRA. The settlement residue committee is responsible for monitoring, reviewing and reporting on the SRA conducted by AEMO. As such, from time to time, it may require a Review of: AEMO s processes in identifying and contracting with eligible persons; SRA bidding, allocation and settlement processes in accordance with SRA procedures; and SRA system changes based on AEMO s change management process. The Review of the SRA is undertaken periodically, typically every second year. The auditor must prepare a report in which the results of the Review are set out. This report will be published on the AEMO website. Page 15

17 SECTION G: METERING AUDIT & RELATED SERVICES G.1 Accreditation Services (a) (b) (c) Background To operate the NEM, AEMO is required to process metering data from approximately 8.5 million metering installations. To achieve this, AEMO accredits Metering Data Providers (MDPs), who collect, process and provide metering data to AEMO for settlement purposes. AEMO also accredits Metering Providers (MPs), who provide, install and maintain metering installations. MDP and MP responsibilities are detailed in the following service level procedures that are published on the AEMO website: Service Level Procedure: Metering Data Provider Services Categories D and C for Metering Installation Types 1, 2, 3, 4, 5, 6 and 7 Service Level Procedure: Metering Provider Services Category B for Metering Installation Types 1, 2, 3, 4, 5, 6 and 7 (MPB) The number of businesses seeking accreditation is expected to vary as the NEM develops over time. Scope The service level procedures address the technical service requirements that will be used to assess an applicant s capability for accreditation as an MDP and MPB. Applicants are required to respond to a checklist so their capabilities can be assessed in detail. The checklists are also available from AEMO s website. The accreditation review and provision of a subsequent report to AEMO is to be based on the checklist of responses provided by applicants and an on-site review of each applicant s capability to comply with the relevant service level procedures. Accreditation Services Required The delivery of accurate, timely data to AEMO is essential for the operation of the NEM. Failure to manage metering data and metering installations in line with the NER and AEMO s requirements has the potential to materially affect settlements. Security, disaster recovery and confidentiality are all key areas of concern. Accreditation is the process through which AEMO and Market Participants gain assurance that MDPs have adequate systems and procedures to provide accurate, reliable and timely services and data to facilitate timely and accurate settlements. Technical functions to be assessed are specified in the relevant service level procedures relating to: the security of data access; the review and identification of processes which satisfy the service level procedures, including: o o o o o o documented procedures; the auditing of systems; performance; compliance with the NER and procedures under the NER as referred to in the service level procedures; the accuracy of calculations within an MDP s database; the robustness of the MDP s database, including: Page 16

18 (d) disaster recovery; mirrored system; transaction control; database administration procedures etc; Computer system hardware capabilities such as protection against power or equipment failure etc; Maximum data volume capacity (that is, has the MDP the technical capacity to deliver?); Confirm the MDP s commercial viability to become a longer-term partner with AEMO, including: o o Functional capability; and Industry knowledge Anticipated Workload The number of applicants will vary from year to year. Historically, they have been in the region of 1-3 per year, but this should not be taken as an indicator of future applications. G.2 Metering Data Provider Reviews (a) Background MDP Reviews are designed to report on MDP compliance with the NER and the service level procedures. MDPs are accredited to provide metering data services for all or some of the following categories: Metering data collection, processing and delivery services for Metering Installation Types 1-4; Metering data collection, processing and delivery services for Metering Installation Types 5, 6 and 7; and Metering data collection services for Metering Installation Types 5 and 6. The Reviews for each MDP will be conducted on a 6-month or 12-month cycle, the cycles being determined by AEMO prior to each 12-month Review period. During each 12-month cycle all significant areas of the service level procedures will be reviewed at least once. Each MDP is given the opportunity to respond to any reported issues. At the completion of each Review, a full report is provided to the MDP and AEMO. The table below indicates the maximum effort AEMO expects from the successful Tenderer to undertake each MDP Review where the Review period is based on a 6-monthly cycle (that is, two Reviews undertaken within the 12-month period): MDP Accreditation Type Type 1 4 only 4 Type 5 7 only 4 Types 1-7 inclusive 6 FTE days The table below indicates the maximum effort AEMO expects from the successful Tenderer to undertake each MDP Review where the Review period is based on a 12-monthly cycle (that is, one Review undertaken within the 12-month period): Page 17

19 MDP Accreditation Type FTE days Type 1 4 only 6 Type 5 7 only 6 Types 1-7 inclusive 8 The table below details the number of active MDPs in the NEM by accreditation type: MDP Accreditation Type Number of MDPs Type 1 4 only 5 Type 5 7 only 10 Types 1-7 inclusive 5 Types 5 & 6 (collection only) 2 (b) (c) Scope Service level procedures requirements that have been reviewed in the past include: Reporting (i) (ii) Validations and substitutions Mapping processes to service level procedures requirements. IT security, storage and recovery Disaster recovery planning Performance monitoring Consumer Administration and Transfer Solution (CATS) processing Adjustments and aggregation Metering register Collection processes Report to MDP A consolidated report of each Review will be presented to the relevant MDP in an electronic format, which must: provide a summary of the Review findings; specify issues identified during the Review; provide an analysis of the issue and an appropriate risk rating (according to AEMO s risk matrix) in relation to the impact on MDP operations; provide an analysis for each issue as to whether the non-compliance is assessed as an error of a system, operation or procedure ; provide a recommendation to resolve each issue; present MDP management comment and actions in relation to the issue; provide details and progress made to address issues previously reported; and include comment and summary on past Review findings rectified and not rectified. Report to AEMO Page 18

20 G.3 Metering Provider Reviews (a) A consolidated report for each MDP must be provided to AEMO along with a summary of findings for all MDPs that includes: findings of issues grouped by compliance areas; findings grouped by MDP and risk rating; comment on past Review findings rectified and not rectified; and a list of any Review findings that require AEMO s action, for example, clarification of any service level procedures. Background/scope A Metering Provider (MP) is a person who meets the requirements listed in NER Schedule 7.4 and is accredited and registered by AEMO in that capacity in accordance with the qualification process established under NER S7.4.1(b). An MP is accredited to provide, install and maintain metering installations. The NER provide a basis for MPs to be engaged by the responsible person (RP). The RP must ensure that all facets of a metering installation are maintained and may engage any number of MPs to undertake different components of work at each metering installation (for example, to design the installation, install measurement transformers, install meters, install data communications, conduct tests, conduct ongoing maintenance). Whilst it is the RP who has overall responsibility for a metering installation, it is the MP who undertakes the testing and maintenance of the metering installations. The objective of the Review is to provide assurance to AEMO that: MPs comply with the NER and the applicable service level procedures; and MPs Metering Asset Management Plans (MAMPs) are approved and fully implemented. Each MP s activities must be reviewed biennially. These reviews will include, without limitation: Compliance with service level procedures and NER requirements; Compliance with MAMPs; Compliance with any testing strategies and plans that are operated under a NER requirement or have been approved by AEMO; and Adherence to jurisdictional and Network Service Provider requirements. The table below provides indicates the maximum effort AEMO expects from the successful Tenderer to undertake each MP Review based on a 24-monthly Review cycle (that is, one Review undertaken within a 24-month period): MP accreditation type FTE days Type 1 4 only 4 Type 4 6 only 4 Types 1-6 inclusive 6 The table below summarises the status of each current MP. Page 19

21 Metering Provider ID City/State Accreditation Category and Metering Installation Type (NER Schedule 7.4) 1C 1V 1M 1A 2C 2V 2M 2A 3M 3A 4M L Canberra / ACT 2 Melbourne/Victoria 3 Hobart / Tasmania 4 Port Macquarie / NSW 5 Melbourne / Victoria 6 Melbourne / Victoria 7 Brisbane / Queensland 8 Rockhampton / Queensland 9 Adelaide / South Australia 10 Sydney / NSW 11 Melbourne / Victoria 12 Melbourne / Victoria 2 13 Brisbane / Queensland 14 Melbourne / Victoria 15 Melbourne / Victoria 16 Melbourne / Victoria 17 Newcastle / NSW 18 Melbourne / Victoria 19 Melbourne/Victoria (b) Reporting (i) Report to MP A consolidated report of each Review will be presented to the appropriate MP in electronic format. Each report must: Provide a summary of the findings; Specify issues identified during the Review; Provide an analysis of the issue and an appropriate risk rating (high, medium or low) in relation to the impact on MP operations; Provide an analysis for each issue as to whether the non-compliance is assessed as an error of system, operation, or procedure ; Provide a recommendation to resolve each issue where appropriate; Present the management comment and actions in relation to the issue; Provide details and progress made to address issues previously reported; and Include comment and summary on past findings rectified and not rectified. (ii) Report to AEMO A consolidated report for each MP is to be provided to AEMO along with a summary of findings for all MPs that includes: Findings of issues grouped by compliance areas; Findings grouped by MP and risk rating; Comment on past Review findings rectified and not rectified; and 2 Accreditation for type 3A does not include metering installation involving voltage transformers. Page 20

22 A list of any Review findings that require AEMO s action, for example, clarification of any service level procedures. Page 21

23 SECTION H: INTERNAL AUDIT SERVICES (a) Background An effective internal control structure is central to AEMO's corporate governance. Key elements of the structure include: Management attitude to and awareness of the need for sound control; The appropriateness of the system of delegations and authorisations; The knowledge, experience and skill sets of key staff; The maturity and stability of systems and processes; The extent and nature of management oversight of activities; and The quality (relevance and reliability) of information flowing upwards and downwards on operating and systems performance. AEMO obtains assurances on the effectiveness of controls or improves control by: Conducting control and risk self-assessment; Establishing accountability "sign-off" arrangements; Benchmarking and process re-engineering; Incorporating key result areas (KRAs) into business plans which deal specifically with controls; and Conducting an internal audit program. (b) Approach AEMO will appoint an internal auditor to oversee and administer its internal audit program. The internal auditor will perform a number of the planned reviews annually. The reviews to be completed by the internal auditor will be agreed with AEMO. It is expected that there will be at least three reviews completed by the internal auditor per financial year. Some Reviews will be undertaken by specialist firms as considered appropriate by AEMO. These firms will be identified and managed by AEMO. The internal auditor will be responsible for: Preparation of the annual internal audit plan and approach; Presentation of the annual internal audit plan and approach to the Risk and Audit Committee; Scoping of work to be completed for each planned internal audit to be undertaken by the internal auditor, including engagement with AEMO subject matter experts and management; Completion of internal audit fieldwork and reporting within agreed timeframes; and Being available to management and the Risk and Audit Committee as required by AEMO. The execution of the internal audit program and completion of agreed Reviews will be managed by the internal auditor. The internal auditor will be required to ensure that these Reviews are completed to a standard required by AEMO. Page 22

24 Item Internal Auditor Preparation of Strategic Internal Audit Plan Presentation of Strategic Internal Audit Plan to AEMO s Risk and Audit Committee AEMO Specialist firms Engagement with applicable AEMO managers and staff Preparation of scope documents for internal audits Perform fieldwork Prepare report of findings Present findings to AEMO s Risk and Audit Committee (c) Scope AEMO s audit universe includes (without limitation) the following: Corporate Functions Document Management Payroll Review of Purchasing and Payment Processes Budgeting and Financial Management Property Management and Security Human Resources Management & Information Systems Division of Duties Review of Occupational Health & Safety and Environmental Management Procurement & Contract Management Services Management Office Governance Disaster Recovery & Business Continuity Planning Market and System Operator & Planning Functions New Connections Emergency Planning Forecasting System Operations IT Participant Interfaces Participant Registration & Related Activities Exercise of Discretion Transmission Use of System Pricing Rule Change Processes Quality of data Gas Supply Hub Ancillary services AEMO expects the successful Tenderer to utilise: Appropriate risk assessment methodologies; Review planning protocols, documentation and processes; Partner with firms with specific expertise, where appropriate Access to and integration of best practices; Quality control practices; and Processes for tracking, resolving and communicating Review findings. In determining the areas for Review and their priority, the successful Tenderer must consider: AEMO's business model; Page 23

25 AEMO's risk register and risk framework; Areas previously identified for Review; Areas previously Reviewed; Compliance breaches identified; AEMO s strategic objectives and corporate drivers; and Summaries of findings of other Reviews. The successful Tenderer will be expected to express an opinion on: The extent of compliance with applicable laws, rules, regulations, policies and procedures; The effectiveness of the design, implementation and operation of internal controls; The completeness, accuracy and reliability of information and underlying records; and The efficiency and effectiveness of business processes. (d) Relationship between Internal Audit Services and other Services The successful Tender will need to be cognizant of the fact that Services other than Internal Audit Services are being acquired by AEMO and that it might be necessary, from time to time, to Review areas not covered by the other Services. More particularly, it is expected that the areas to be targeted will be determined on a risk assessment basis and that the areas that might be included within the scope of Internal Audit Services include: Type of Review Details Volume of Work Compliance Review Effectiveness Review Advisory Review Designed to assess AEMO's compliance against defined legislation, procedures or standards Assess the efficiency and appropriateness of AEMO's processes and recommendation of cost-effective improvements Used primarily in new or evolving areas, provides guidance on accepted practice, assesses different options and recommends directions 35% 50% 15% (e) Delivery Dates AEMO s Risk and Audit Committee meets four times each year. The Service plan must be presented to the Risk and Audit Committee for approval at its meeting in May each year. It has been usual practice to schedule one to two Reviews each quarter giving consideration to the timing and impact of fieldwork on other AEMO operational requirements and commitments. Reviews and reports should be effectively managed to enable delivery of draft reports to management at least 30 days prior to each scheduled Risk and Audit Committee meeting. Page 24

26 SECTION I: CONTRACT TO BE EXECUTED Page 25

27 SECTION J: TENDER FORM Market Audit Services Gas/Market Audit Services NEM/Metering Audit Services/Internal Audit Services (please select one and delete the rest) To: Australian Energy Market Operator Ltd Level 22, 530 Collins Street MELBOURNE VIC 3000 (AEMO) Tender From: Tenderer: ABN: Address: Contact Person: Name: Title: Telephone No: Facsimile No: 1. Offer The Tenderer hereby tenders to provide the Market Audit Services Gas/Market Audit Services NEM/Metering Audit Services/Internal Audit Services (please select one and delete the rest) 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 not 3 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 Services The Tenderer provides in: Schedule 2, details of its experience in the delivery of goods or services that are similar to the Services; 3 Delete as appropriate. Page 26