National Energy Board – 2015–2016 Departmental Performance Report - Section II: Expenditure Overview

Section II: Expenditure Overview

Actual Expenditures

Budgetary Financial Resources (dollars)
2015–16
Main Estimates
2015–16
Planned Spending
2015–16
Total Authorities
Available for Use
2015–16
Actual Spending
(authorities used)
2015–16
Difference
(actual
minus planned)
76,820,510 77,550,511 96,437,428 82,396,568 4,846,057
Human Resources (Full-Time Equivalents [FTEs])
2015–16
Planned
2015–16
Actual
2015–16
Difference
(actual
minus planned)
471.2 457.5 (13.8)

Budgetary Performance Summary

Budgetary Performance Summary for Programs and Internal Services (dollars)
Strategic
Outcome(s),
Program(s)
and Internal
Services
2015–16
Main
Estimates
2015–16
Planned
Spending
2016–17
Planned
Spending
2017–18
Planned
Spending
2015–16
Total
Authorities
Available
for Use
2015–16
Actual
Spending
(authorities
used)
2014–15
Actual
Spending
(authorities
used)
2013–14
Actual
Spending
(authorities
used)
1.1 Energy Regulation Program 49,588,459 52,632,974 61,322,894 44,906,857 62,723,358 43,185,092 45,310,493 47,970,746
1.2 Energy Information Program 5,982,273 5,620,814 7,648,605 7,018,161 8,475,092 9,018,344 6,567,390 6,156,305
Subtotal 55,570,732 58,253,788 68,971,499 51,925,018 71,198,450 52,203,436 51,877,883 54,127,051
Internal Services Subtotal 21,249,778 19,296,723 24,633,776 21,920,428 25,238,978 30,193,132 35,443,200 27,555,630
Total 76,820,510 77,550,511 93,605,275 73,845,446 96,437,428 82,396,568 87,321,083 81,682,681

There was an increase of $4.8 million in actual spending during 2015–16 compared to planned spending. This is mainly due to increased stakeholder engagement for the NEB’s National Engagement Initiative, safety and environmental protection activities, development and implementation of the Operations Regulatory Compliance Application (ORCA), as well as the development of new governance tools to support the NEB’s strategic outcome.

The NEB’s total spending authority increased to $96.4 million from planned spending of $77.5 million in 2015–16. This increase stems from Budget 2015 which foresaw an increase of $80 million to the appropriations of the NEB for safety and environmental protection and engagement with Canadians. This funding is divided over five years and approximately $18.1 million (23%) was allocated to 2015–2016.

The $18.1 million was only available to the NEB very late in the fiscal year (March 2016), because Parliament voted the funds later than usual due to the federal election in October 2015. This further delayed the actual receipt of the funding by the NEB and as a result only $5.9 million of the funds could be used. A small organization like the NEB needs lead time to spend such extensive increases in a timely fashion, as it has little flexibility to risk-manage large amounts of spending without Parliamentary authorization.

While the NEB had total authorities of $96.4 million, actual spending was $82.4 million which resulted in a lapse of $14 million as follows:

  • $12.2 million attributed to late Parliamentary authorization of Budget 2015 funding; and
  • Approximately $5 million resulted from delays beyond the control of the NEB for major applications (Energy East and Imperial).

These lapses were partially offset by $3.2 million which was absorbed for eligible paylist and collective bargaining amounts. Despite the total lapse of $14 million, the NEB was able to deliver on all programs.

FTEs and associated salaries from Legal Services and Communications Business Unit were part of planned spending in the Energy Regulation Program in the 2015–16 RPP, however these FTEs were moved into Internal Services and thus account for the variance between actual and planned spending.

Departmental Spending Trend

Departmental Spending Trend Graph
Text description of this graph

Departmental Spending Trend Graph

This bar graph shows the National Energy Board’s planned and actual spending for the fiscal years 2013–14 to 2018–19.

Total Spending and planned spending by period is as follows:

  • 2013–14: $81.7 million
  • 2014–15: $87.3 million
  • 2015–16: $82.4 million
  • 2016–17: $93.6 million
  • 2017–18: $73.8 million
  • 2018–19: $72.2 million

The Spending Trend Graph shows the NEB’s actual spending (2013–14 through 2015–16) and planned spending (2016–17 through 2018–19).

The NEB’s expenditures in 2015–16 show a decrease of $4.9 million from the prior fiscal year, due to the difference in increased spending in some areas and decreased spending in others, primarily in the following:

  • Increased salaries ($2.2 million);
  • Increased cost of Information Technology services ($1.3 million) mainly related to: stakeholder engagement initiatives; safety and environmental protection; the implementation of government-wide systems such as Phoenix, the pay system; My GCHR, the Human Resource Information Technology application; Canada.ca; and Open Government;
  • A decrease in the amount of severance termination benefits paid out the previous year due to the elimination of the employee severance pay program in 2014–15 ($4.6 million);
  • Decreased costs associated with the move to a new office in Calgary ($3.4 million); and
  • Decreased costs for general goods and services such as training, and hospitality ($0.4 million).

2017–18 planned spending is $19.8 million less than 2016–17 planned spending. This is mainly due to:

  • The expiration of temporary funding from Treasury Board Submissions 2012 and 2014 at the end of 2016–17 ($5.7 million) that was for NEB safety and security programs as well as public awareness;
  • The expiration of temporary funding for Mega Projects, the majority of which expires at the end of 2016–17 ($6.4 million);
  • Decreased funding for the Operating and Maintenance portion of Budget 2015 which was front-end loaded with contracting and training to ramp-up initiatives related to safety and environmental protection and engaging with Canadians ($4.0 million); and
  • Decreased funding for operational budget carry forward from 2016–17 to 2017–18 as it is expected the NEB’s full appropriation will be spent in 2016–17 ($3.3 million).

Approximately 95 percent of the NEB’s appropriations are recovered from regulated companies and monies go directly to the Consolidated Revenue Fund by virtue of the National Energy Board Cost Recovery Regulations, enacted pursuant to Section 24.1(1) of the National Energy Board Act. The NEB does not have the authority to unilaterally raise its ratio for cost recovery from regulated companies. Parliament would make that decision.

The NEB does not currently recover costs related to its work under the Canada Oil and Gas Operations Act (COGOA) and the Canada Petroleum Resources Act, which currently represent about 5 percent of the NEB’s operating costs. The Energy Safety and Security Act, which came into force on 26 February 2016, allows the Governor in Council to make regulations to recover costs from COGOA-regulated companies.

Expenditures by Vote

For information on the National Energy Board’s organizational voted and statutory expenditures, consult the Public Accounts of Canada 2016.

Alignment of Spending With the Whole-of-Government Framework

Alignment of 2015–16 Actual Spending With the Whole-of-Government Framework (dollars)
Program Spending Area Government of Canada Outcome 2015–16 Actual Spending
1.1 Energy Regulation Economic affairs Strong economic growth 43,185,092
1.2 Energy Information Economic affairs Strong economic growth 9,018,344
Total Spending by Spending Area (dollars)
Spending Area Total Planned Spending Total Actual Spending
Economic Affairs 58,253,788 52,203,436
Social Affairs 0 0
International Affairs 0 0
Government Affairs 0 0

Financial Statements and Financial Statements Highlights

Financial Statements

The NEB’s Financial Statements can be found on the NEB’s website.

Financial Statements Highlights

The National Energy Board operates on a full accrual accounting basis according to Treasury Board’s policy for reporting based on generally accepted accounting principles (GAAP). The tables below provide highlights from the NEB’s Statement of Operations and Statement of Financial Position, as presented in its 2015–16 financial statements. As such, differences do exist between these tables and those presented in other sections of the Departmental Performance Report, which are prepared on the modified cash basis of accounting.

Condensed Statement of Operations
For the Year Ended March 31, 2016 (dollars)
Financial Information 2015–16
Planned Results
2015–16
Actual
2014–15
Actual
Difference
(2015–16 actual
minus
2015–16 planned)
Difference
(2015–16 actual
minus
2014–15 actual)
Total expenses 91,503,211 98,624,642 90,281,795 7,121,431 8,342,847
Total revenues - - - - -
Net cost of operations
before government funding
and transfers
91,503,211 98,624,642 90,281,795 7,121,431 8,342,847

The variance between 2015–16 actual and planned expenditures is primarily due to additional funding received (Budget 2015) in the fourth quarter of 2015–16 to cover expenses related to safety and environmental protection, and enhancing engagement with Canadians.

The significant increase in actual expenditures from the previous year is primarily due to an increase in transfer payments for the Participant Funding Program ($2.2 million); an increase in salaries mainly related to hiring FTEs under Budget 2015 for safety and environmental protection and enhanced engagement with Canadians ($4.2 million), an increase in amortization mainly related to a leasehold improvement to the new office in Calgary ($1.3 million) and an increase in professional services mainly related to central initiatives, change management and the hearing process ($3.2 million). At the same time there was a decrease in the relocation costs to a new office within Calgary ($2.6 million).

Condensed Statement of Financial Position
As at March 31, 2016 (dollars)
Financial Information 2015–16 2014–15 Difference
(2015–16
minus
2014–15)
Total net liabilities 19,031,783 28,439,130 (9,407,347)
Total net financial assets 13,189,146 11,847,875 1,341,271
Departmental net debt 5,843,637 16,591,255 (10,747,618)
Total non-financial assets 22,873,096 24,928,416 (2,055,320)
Departmental net financial position 17,029,459 8,337,161 8,692,298

Total net liabilities and Departmental net debt have a decrease of $9.4 million and $10.7 million, respectively. Overall Departmental net financial position has improved by $8.7 million. This is mainly due to adjustment of a levy under the Section 5.2(1) of the National Energy Board Recovery Regulations that was invoiced for levies and collected from newly regulated parties in 2014–15. In 2014–15, there were payables of $11 million, representing levies collected from newly regulated parties. These amounts reduced the cost recovery levies of the other regulated parties and were recorded as payable to these parties until this adjustment was made in the year after the Section 5.2(1) levy had been invoiced.

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