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In the quickly evolving economic climate, Canadians are responding with strategic approaches to energy choices. As outlined in its Report on Plans and Priorities for 2009-2010, the National Energy Board (NEB or Board) is positioned to provide the expert leadership required for regulation of infrastructure that meets the Canadian public interest.
The current environment includes uncertain and volatile financial markets, challenges in accessing energy supplies, increasing environmental concerns and growing public involvement in the development of energy infrastructure. At the same time, Canada’s energy infrastructure continues to develop in keeping with growing demand for energy by consumers. For example, expansion of the crude oil pipeline system is occurring with construction underway on Enbridge’s Alberta Clipper, Southern Lights and Line 4 Buildback projects and on TransCanada Pipeline’s Keystone project. Kinder Morgan’s Anchor Loop project was just recently completed. These expansions will allow increased exports and continue to add value to the Canadian economy. In this context, the NEB, within the mandate set by Parliament, has a critical role in promoting energy infrastructure which operates safely and with minimal environmental impact. The NEB also provides industry, policy makers and the public with objective, independent and timely information on Canada’s energy markets to assist in decision-making for energy infrastructure and markets.
In 2009-2010, the NEB will be focusing on working with industry to further promote safety and pipeline integrity through the sharing of information and effective reporting. The NEB must also address increasing stakeholder concerns so that the rights and interests of those affected by the development of energy infrastructure are respected, including landowners and Aboriginal people. The NEB is meeting these demands by enhancing its regulatory programs, and ensuring an experienced expert staff complement. An investment in the NEB’s information systems is required at this time in our goal of improving regulatory effectiveness and efficiency through a risk-based lifecycle management system and to make information essential to the investment in energy development in frontier areas more readily accessible.
Subject to a decision currently before the Board, commencing in 2009 the NEB may assume regulatory responsibility over certain pipelines and related facilities in Alberta currently under provincial jurisdiction. Depending on the Board’s decision, this has the potential to result in 50% more pipelines and related facilities requiring NEB regulatory oversight. To successfully implement these regulatory and systems enhancements, and to meet new and ongoing workload demands, the NEB will require additional resources, and is developing a proposal for the Treasury Board.
NEB processes are often part of broader regulatory processes; we continue to partner with other departments and agencies in order to promote regulatory efficiency and effectiveness, including improving the regulatory framework for the North.
As the Board continues to work hard to balance and integrate public safety, environmental interests and economic efficiency in arriving at decisions that are in the Canadian public interest, I am confident that Canadians will be able to make the best choices for the tremendous endowment of energy resources they possess.
Gaétan Caron
Chair and CEO
The NEB’s corporate purpose is to promote safety and security, environmental protection and efficient energy infrastructure and markets in the Canadian public interest1within the mandate set by Parliament in the regulation of pipelines, energy development and trade.
The NEB’s corporate vision is that it is an active, effective and knowledgeable partner in the responsible development of Canada’s energy sector for the benefit of Canadians.
Excellence at the NEB is driven by organizational and personal commitment to three key corporate values:
The NEB is an independent federal agency that regulates several aspects of Canada’s energy industry. Its purpose is to promote safety and security, environmental protection and efficient energy infrastructure and markets in the Canadian public interest within the mandate set by Parliament in the regulation of pipelines, energy development and trade. The NEB regulates the construction and operation of pipelines that cross international or provincial borders, tolls and tariffs on these pipelines, international power lines and designated interprovincial power lines. The NEB also regulates natural gas imports and exports, oil and natural gas liquid exports, electricity exports, and some oil and gas exploration on frontier lands, particularly in Canada’s North and certain offshore areas. In addition, the NEB provides Canadians with information about Canadian energy markets. The NEB reports to Parliament through the Minister of Natural Resources.
The main functions of the NEB, which was established in 1959, are set out in the National Energy Board Act (NEB Act). The Board has additional regulatory responsibilities under the Canada Oil and Gas Operations Act (COGO Act) and under certain provisions of the Canada Petroleum Resources Act (CPR Act) for oil and gas exploration and activities on frontier lands not otherwise regulated under joint federal/provincial accords. In addition, Board inspectors are appointed Health and Safety officers by the Minister of Labour to administer Part II of the Canada Labour Code as it applies to facilities regulated by the Board.
The NEB’s regulatory responsibilities for public safety, security and protection of the environment are set out in the NEB Act and the COGO Act. The NEB is also required to meet the requirements of the Canadian Environmental Assessment Act (CEA Act) and the Mackenzie Valley Resource Management Act where the Board’s environmental responsibilities span three distinct phases: evaluating potential environmental effects of proposed projects; monitoring and enforcement of terms and conditions during and after construction; and monitoring and regulation of ongoing operations, including deactivation and abandonment. Through the Public Safety Act, 2002 (Bill C-7) the NEB has legislative authority for the security of pipelines and international power lines.
The NEB is an independent regulatory tribunal guided by the principles of natural justice and procedural fairness. The Board is a court of record and has certain powers of a superior court of record including those for attendance, swearing and examination of witnesses, the production and inspection of documents, the enforcement of its orders and the inspection of property. The Board’s regulatory decisions and the reasons for them are generally issued as public documents.
In order to effectively achieve its purpose, the NEB strives to achieve the following strategic outcome:
Safe and secure pipelines and power lines built and operated in a manner that protects the environment and enables efficient markets.
The chart below illustrates the NEB’s framework of program activities and sub-activities through which the Board works toward achieving its Strategic Outcome.
The NEB modified its Program Activity Architecture (PAA) to meet Treasury Board requirements; the revised PAA was approved by Treasury Board in 2008. The table below describes the changes and why the modifications were necessary.
Previous Title | Revised Title(s) | Rationale for Modification | |
---|---|---|---|
Strategic Outcome | Safety, security, environmental protection and economic benefits through regulation of pipelines, power lines, trade and energy development within the National Energy Board’s jurisdiction. | Safe and secure pipelines and power lines built and operated in a manner that protects the environment and enables efficient markets. | The changes in the Strategic Outcome statement were made to meet Treasury Board requirements regarding clarity, being long-term and enduring in nature, measurability, representation of an end-state, and existing at an appropriate level for the organization. |
Program Activity | Energy Regulation and Advice |
Energy Regulation Energy Information |
The NEB’s single program activity was split into two major programs: Energy Regulation and Energy Information. The changes in the PAA framework are based on Treasury Board requirements regarding intended impacts, clear governance, unique expected results, unique performance indicators and reportability as a unique element. |
Internal Services | No change | No change |
The table below illustrates the redistribution of financial resources in fiscal year 2009-10 as a result of the PAA changes:
Previous Title | Financial Resources (million $) | Revised Title(s) | Redistribution of Financial Resources (million $) | |
---|---|---|---|---|
Program Activity | Energy Regulation and Advice | 44.4 | Energy Regulation Program | 20.7 |
Energy Information Program | 7.3 | |||
Internal Services | 16.4 |
2009-2010 | 2010-2011 | 2011-2012 | |
---|---|---|---|
Financial Resources (million $) | 44.4 | 36.7 | 36.7 |
Human Resources (Full Time Equivalents) | 347.6 | 296.6 | 296.6 |
The financial and human resources table above provides a summary of total planned spending for next three fiscal years.
The figures in this table are from the NEB’s current Main Estimates. Additional funding made available through the NEB’s 2007 Treasury Board submission ends for 2010-2011. The NEB will be presenting a business case to Treasury Board in 2009 for resources to meet ongoing workload pressures past 2010, as discussed in the Expenditure Profile section.
Performance Indicators | Targets |
---|---|
Frequency of disabling injuries and pipeline failures | 0 disabling injuries and 0 pipeline failures; assessed via reported incidents and year by year improvement |
Frequency of major releases into the environment (Major release = greater than 100 m3 of liquid hydrocarbon) | 0 releases; assessed via reported incidents and year by year improvement |
Canadian energy and transportation markets are working well | Adequate oil and natural gas pipeline capacity in place; similar Canadian and US energy markets have equivalent pricing; pipeline companies provide services which meet the needs of shippers |
Program Activity | Expected Results | Forecast Spending (million $) 2008-09 |
Planned Spending (million $) |
Alignment to Government of Canada Outcomes | ||
---|---|---|---|---|---|---|
2009-10 | 2010-11 | 2011-12 | ||||
Energy Regulation |
|
47.4 | 32.8 | 27.0 | 27.0 | Strong economic growth |
Energy Information |
|
NA | 11.6 | 9.7 | 9.7 | |
Total | 47.4 | 44.4 | 36.7 | 36.7 |
Priorities | Type | Link to Strategic Outcome | Description |
---|---|---|---|
Demand for new and enhanced regulatory programs | New | SO-1 |
In order to be able to continue to meet its purpose, the NEB is working to meet the demand for new and enhanced regulatory programs by:
|
Improve regulatory processes |
Previously committed to |
SO-1 |
In order to ensure that the NEB’s regulatory processes are effective and efficient, the NEB is committed to the following initiatives:
|
Build partnerships for regulatory efficiency and effectiveness |
Previously committed to |
SO-1 |
Building partnerships with other organizations and stakeholders is a key factor in achieving improved regulatory efficiency and effectiveness. The NEB will continue to build more effective partnerships through initiatives such as:
|
Effective engagement in NEB processes |
Previously committed to |
SO-1 |
|
* Implementation is dependent on NEB request for funding to Treasury Board for 2010 onward (to be submitted in 2009); details are contained in Expenditure Profile section. |
Priorities | Type | Link to Strategic Outcome | Description |
---|---|---|---|
Employee planning and development | Previously committed to | SO-1 |
Considerable expertise is required throughout the organization to carry out the NEB’s mandate. A high level of activity and new and more complex projects combined with a competitive labour market has made it challenging for the NEB to attract and retain its employees while maintaining knowledge within the organization. The following initiatives are being undertaken to meet this priority:
|
Improved corporate effectiveness | Previously committed to | SO-1 |
The NEB is working to improve a number of corporate processes that will help to achieve organizational efficiencies by:
|
Improved information management | Previously committed to | SO-1 |
Information systems improvements are required in order to regulate effectively in line with the Board’s risk-based approach as well as to efficiently manage program records. Initiatives that will be undertaken to address this priority include:
|
* Implementation is dependent on NEB request for funding to Treasury Board for 2010 onward (to be submitted in 2009); details are contained in Expenditure Profile section. |
In establishing priorities for 2009-2010, the NEB considered societal and industry trends that might influence how it carries out its responsibilities and delivers results to Canadians.
Canada’s federally regulated pipeline and power line system transports over $100 billion of energy every year in a safe, environmentally sound and economically efficient manner. However, safety and maintaining the physical integrity of pipelines in the industry are concerns as infrastructure ages and industry is challenged to attract and retain experienced staff. The NEB must continue to communicate its expectations on safety to industry and develop appropriate leading safety indicators and ensure transparent reporting and communication by industry to promote a culture of safety within the industry. In addition, the NEB will need to keep informed of new technology and methods being used in remote areas and unconventional production in order to effectively set expectations and monitor safety performance.
There is a need to update regulations under which the NEB operates. A number of regulations, including the Onshore Pipeline Regulations, require updating to reflect learnings since 1999 regarding gaps or lack of clarity; others, such as the COGO Act and CPR Act need to be modernized in order to provide adequate regulatory oversight for increased exploration and production in Canada’s frontiers. The NEB also needs to further clarify goal oriented regulation and the risk-based lifecycle approach with industry and other interested parties.
The NEB will have significantly higher expectations placed upon it for public engagement activities. For example, many landowners have expressed concern regarding the impact of pipeline development near or on their land. In the area of Aboriginal engagement, court decisions have furthered the understanding of the obligation of the Crown to consult with Aboriginal people but there is work yet to be completed so that Aboriginal people, project proponents, governments and regulators better understand their respective roles and their contributions to solutions. The success of Crown consultation as coordinated through the Major Projects Management Office will partly depend on the effectiveness of the NEB’s Aboriginal engagement work as well as that of the NEB hearing process itself.
At their best, the NEB’s processes enhance trust and understanding among parties and result in agreement that the process was fair. However, the NEB could face eroding trust in its processes if it is unable to deal effectively with new issues, demands and opportunities. The NEB will need to be proactive in its understanding of issues and new activities, partner effectively with other regulators, the CEA Agency and the Major Projects Management Office, and improve public understanding and awareness of the NEB’s role and actions.
Capacity and retention of expert knowledge within the NEB are also of concern. Considerable staff expertise is required to carry out the NEB’s mandate, and it is challenging to hire and retain staff with current labour market and demographic trends. In addition, changing development trends and new energy technologies require continuous staff education to ensure that the NEB has the appropriate expertise to effectively regulate the industry.
Over 90 percent of the NEB’s costs are recovered from the regulated industry. The NEB Act authorizes the Board to charge those companies it regulates costs attributable to the NEB’s operations in carrying out its related responsibilities. This process is managed through the Cost Recovery Regulations under the NEB Act. The NEB’s financial statements, anticipated expenditures and performance results are presented to the Cost Recovery Liaison Committee, made up of industry’s major associations and companies, at regularly scheduled meetings.
In 2007, the NEB submitted a request to Treasury Board for funding to address increased industry activity over the period 2007-2010; this request was fully funded. Due to a sustained and continued requirement for resources to meet workload demand linked to industry activity and other emerging trends, the NEB has assessed that it will require the increase in allocation to be maintained beyond 2010, and will be presenting a business case to Treasury Board to this effect in 2009.
For two priority areas for 2009-2010, the NEB has submitted requests to Treasury Board for funds in order to successfully meet commitments. Under the Operational Priorities, for new and expanded regulatory programs, additional resources are required to implement the land matters regulatory program and enhanced Aboriginal engagement. Under the Management Priorities, for enhanced information management and renewal, resources are required to develop the company information system for the NEB’s risk-based lifecycle management system, and to convert the Frontier Information Office microfiche holdings and essential records to digital format. The latter is required to make information essential to energy development in the North more readily accessible to clients.
On June 17, 2008, TransCanada filed an application with the Board requesting that one of its pipeline systems, NOVA Gas Transmission Ltd., otherwise known as the TransCanada Alberta System, be declared under federal jurisdiction and that the Board issue a Certificate of Public Convenience and Necessity for it under section 52 of the NEB Act. The Board decided to conduct a public hearing process to respond to TransCanada’s application; the oral hearing was held in November 2008. Depending on what the decision is, there could be a considerable impact on the NEB. Should the Board determine that the TransCanada Alberta System falls within federal jurisdiction and issue a Certificate, approximately 23,500 km of pipeline and associated compression and other facilities located in Alberta could be added to the roughly 45,000 km of pipeline currently regulated by the Board. This would represent a 50% increase in the amount of pipeline regulated by the NEB. Additional funds to provide regulatory oversight for this system, should it be decided that it falls under federal jurisdiction, will be sought through an application to the Treasury Board.
(million $) | Forecast Spending 2008-2009 | Planned Spending 2009-2010 | Planned Spending 2010-2011 | Planned Spending 2011-2012 |
---|---|---|---|---|
Energy Regulation | 46.2 | 20.7 | 17.3 | 17.3 |
Energy Information | NA | 7.3 | 6.2 | 6.2 |
Internal Services | NA | 16.4 | 13.2 | 13.2 |
Total Planned Spending | 47.4 | 44.4 | 36.7 | 36.7 |
In 2007, the NEB submitted a request to Treasury Board for funding to address increased industry activity over the period 2007-2010, and this request was full funded. Due to a sustained and continued requirement for resources to meet workload demand linked to industry activity and other emerging trends, the NEB has assessed that it will require an increase in allocation to be maintained after 2010, and will be presenting a business case to Treasury Board to this effect in 2009.
Vote # or Statutory Item | Truncated Vote or Statutory Wording | 2008-2009 Main Estimates (million $) |
2008-2009 Main Estimates (million $) |
---|---|---|---|
30 | Program Expenditures | 41.0 | 39.4 |
(S) | Contributions to Employee Benefit Plans | 5.2 | 5.0 |
Total | 46.2 | 44.4 |