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A2E TIMS Tender Ref: BBiHAUGL
AAE Industry Code: B
PTC Application Code: Bi
PTA Project Type: Request for Tender [RFT]
PTD Short Description: Review Cost Allocation Policies
AAC Short Organisation Name: NT - NT Treasury
PTW Tender Web Address: Direct Link to Tender - REF: D04-0815
PTS Submission Conditions:
PDP Tender Published Date: Fri 09 Jul '04
PPC Tender Date Code: AUG9
PTT Tender Schedule: Timetable of tender process:
PDQ Tender Questions Date:
PDR Questions Response Date:
PDC Submission Closing Date: Wed 21 Jul '04
PDT Submission Closing Time (Local): 14:00
TGB Client Reference No: D04-0815
PFI Further Information: Attachments No: 2
A) htm 31 Kb: RFT Document - Scope of Services
A) doc 95 Kb: RFT Document - Scope of Services
B) htm 22 Kb: Tenderer's Response
B) doc 101 Kb: Tenderer's Response
PTE Description Details:
REVIEW COST ALLOCATION POLICIES
Undertake a review of cost allocation policies and practices by regulated entities
3.2 BACKGROUND
The Commission was established as the independent industry regulator, in March 2000, to
undertake the administration of economic regulation in nominated industries in the Northern
Territory.
The objects of the regulatory framework administered by the Commission are the promotion and
safeguarding of competition and fair and efficient market conduct or, in the absence of a
competitive market, the simulation of competitive market conduct and the prevention of the
misuse of monopoly power.
Currently, the electricity supply industry and the water supply and sewerage services industries
have been declared to be regulated industries.
The Power and Water Corporation ("Power and Water"] is the only regulated entity in these
industries.
In March 2004, in response to terms of reference received from the Regulatory Minister, the
Commission issued its final recommendation concerning the valuation of community service
obligations ("CSOs") undertaken by Power and Water as a result of the Government's uniform
tariff and price cap policies.
In its final recommendation, the Commission noted concerns it had regarding Power and Water's
allocations of building block costs (return on capital and return of capital as well as
operations and maintenance expenditure) between both:
A lines of business; and
B customer classes.
In this regard, the validity of the cost allocation component of the Commission's September
2001 Contestable Pricing Guidelines is also at issue, as are the Cost Allocation Procedures
approved by the Commission under the Northern Territory Electricity Ring-fencing Code.
In its final CSO report, as well as in its final determination for the 2004 electricity networks
pricing reset (in April 2004), the Commission foreshadowed the need to further examine Power
and Water's current cost allocation policies and procedures.
From the Commission's perspective, this further examination needs to be undertaken sooner
rather than later, to underpin the electricity generation price monitoring role that has
been assigned to the Commission as well as to inform the Commission's upcoming consideration
of network pricing principles and methods to be proposed by Power and Water in accordance with
the third-party access code.
At issue is whether the cost allocation policies and procedures adopted by Power and Water are
likely to avoid "cross subsidisation", consistent with the objectives of economic efficiency,
equity and competitive neutrality, as required by the Competition Principles Agreement and
relevant Northern Territory legislation.
3.3 SCOPE OF SERVICES
The services of a consultant with expertise in the area of cost allocations in a regulatory
context are required to assist the Commission in reviewing the basis of Power and Water's
allocation of costs - both operating and capital - between products, activities and customers,
and whether the associated policies and procedures as well as the methods used to implement
those policies and procedures are effective in minimising the incidence of cross subsidisation.
In particular, the Commission requires preparation of a consultant's report which makes
findings and recommendations on the following matters:
1. The extent to which the allocations (whether on an average or incremental cost basis)
of the building-blocks cost components between:
1 electricity, water and sewerage and other lines of business;
2 within electricity, between generation, networks, system control and retail
business units;
3 within each line of business and business unit, across geographic regions;
4 within those businesses subject to regulation, between regulated and
non-regulated activities; and
5 within the electricity businesses, between non-contestable customers as a
group on the one hand and contestable customers as a group on the other and,
within contestable customers as a group, between the different tranches of
contestable customers and, within each tranche of contestable customers,
between individual customers
made by Power and Water for the following pricing and related purposes during 2003-04:
(a) the cost reflective prices derived for various tranche 4 contestable
electricity customers provided to Cabinet and the Commission in September 2003;
(b) the cost information provided to the Commission over the period November 2003
to February 2004 for the 2004 CSO valuation relating to non-contestable
electricity customers; and
(c) for a sample of tranche 1, tranche 2 and tranche 3 contestable electricity
customers to be nominated by the Commission, the offer prices made during
2003-04 when existing contracts fell due for renegotiation
involved a degree of cross subsidisation between different businesses, regions,
activities, customer classes or customers and/or differential application between
the various purposes that is assessed to be in excess of the degree possible in
workably competitive markets.
2. If evidence of an excessive degree of cross subsidisation or differential application
is found under (1), the improvements necessary to Power and Water's cost allocation
policies and procedures to minimise the potential for future occurrences of such
cross subsidisation or differential application.
Td
TGA The Tender Box: The Tender Box
TGB Client Reference No: D04-0815
TGC Tender Addressee:
TGD Position:
TGE Department: Contract and Procurement Services
TGF Organisation: NT - Northern Territory Treasury
TBA Room/Suite:
TBB Floor: Ground Floor
TBC Building: Enterprise House
TBD Street Number: 28-30
TBE Street: Knuckey Street (Corner Woods & Knuckey Streets)
TBF Suburb: DARWIN
TBG State: NT
TBH Post code: 0801
TBI Country: Australia
TMW Map for Location:
TFI Further Information:
By Fax to: (08) 8999 1935
Tf
BRA Briefing Session Date:
BRB Briefing Session Time:
BRC Compulsory Attendance Y/N:
BDR Briefing Registration Date:
BTR Briefing Registration Time:
BRO Number of Attendees:
BRE E-mail Address:
BRF Briefing Contact Officer - Preferred:
BRG Briefing Contact Officer - Family:
BRH Business Title:
BRI Department:
BRJ Tel Area Code: {61}(8)
BRK Tel Number:
BRL Fax Area Code: {61}(8)
BRM Fax Number:
BRN Mobile:
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BSA Room/Suite:
BSB Floor:
BSC Building:
BSD Street Number:
BSE Street:
BSF Suburb:
BSG State:
BSH Post code:
BSI Country: Australia
BMW Map for Location:
BFI Further Information:
Tb
AAB Organisation: NT - Northern Territory Treasury
ABA Room/Suite:
ABB Floor:
ABC Building: Cavenagh House
ABD Street Number: 38
ABE Street: Cavenagh Street
ABF Suburb: DARWIN
ABG State: NT
ABH Post code: 0800
ABI Country: Australia
AMW Map for Location:
ABW Department Web Address: http://www.nt.gov.au/ntt/
AFI Further Information:
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ADC Tel Area Code: {61}(8)
ADD Telephone No: 8999 7406
ADE Free Phone:
ADF Fax Area Code: {61}(8)
ADG Fax Number: 8999 6150
ADH Free Fax:
ADJ Lodgment email Address: tendersofficedarwin.dcis@nt.gov.au
ADW Lodgment Web Address: Direct Lodgement of Tender Response
GFI Further Information:
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ACA PO Box: GPO Box 1974
ACB Post Office:
ACC Suburb: DARWIN
ACD State: NT
ACE Post code: 0801
ACF Country: Australia
ACJ Department E-mail Address format: Department E-mail Link
ACW Contacts Web Address: Contacts Web Link
CFI Further Information:
PG1
Th
PDE E-mail Address:
PDF Documentation Officer - Preferred:
PDG Documentation Officer - Family:
PDH Business Title:
PDI Department:
PDJ Tel Area Code: {61}(8)
PDK Tel Number:
PDL Fax Area Code: {61}(8)
PDM Fax Number:
PDN Mobile:
PDW Web Link: Tender Attachments
PEW Web Link: Conditions of Tendering & Conditions of Contract
EFI Further Information: Attachments No: 2
A) htm 31 Kb: RFT Document - Scope of Services
A) doc 95 Kb: RFT Document - Scope of Services
B) htm 22 Kb: Tenderer's Response
B) doc 101 Kb: Tenderer's Response
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PME E-mail Address:
PMF Project Manager - Preferred:
PMG Project Manager - Family:
PMH Business Title:
PMI Department:
PMJ Tel Area Code: {61}(8)
PMK Tel Number:
PML Fax Area Code: {61}(8)
PMM Fax Number:
PMN Mobile:
MFI Further Information:
Tj
PCE E-mail Address: lynton.sherry@nt.gov.au
PCF Contact - Preferred: Lynton
PCG Contact - Family: SHERRY
PCH Business Title:
PCI Department:
PCJ Tel Area Code: {61}(8)
PCK Tel Number: 8999 1922
PCL Fax Area Code: {61}(8)
PCM Fax Number: 8999 1966
PCN Mobile:
NFI Further Information:
Tk
AAB Organisation: NT - Northern Territory Treasury
LCA Room/Suite:
LCB Floor:
LCC Building:
LCD Street Number:
LCE Street:
LCF Suburb:
LCG State:
LCH Post code:
LCI Country: Australia
LMW Map for Location:
DFI Further Information:
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