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Section I: Organizational Expenditure Overview

Organizational Profile

Appropriate Minister: The Honourable Greg Rickford, P.C., M.P.

Institutional Head: C. Peter Watson, P.Eng.

Ministerial Portfolio: Department of Natural Resources

Enabling Instrument(s): National Energy Board Act (NEB Act)

Year of Incorporation / Commencement: 1959

Other: In 2014, the National Energy Board will celebrate 55 years of ardently promoting safety and security, environmental protection and economic efficiency in the Canadian public interest.

Organizational Context

Raison d’être

The National Energy Board is an independent federal, quasi-judicial regulatory tribunal established in 1959 to promote safety and security, environmental protection and economic efficiency in the Canadian public interest within the mandate set by Parliament for the regulation of pipelines, energy development and trade.

Responsibilities

The main responsibilities of the NEB are established in the NEB Act and include regulating:

  • The construction, operation, and abandonment of pipelines that cross international borders or provincial/territorial boundaries, as well as the associated pipeline tolls and tariffs;
  • The construction and operation of international power lines and designated interprovincial power lines; and
  • Imports of natural gas and exports of crude oil, natural gas liquids (NGL), natural gas, refined petroleum products and electricity.

Additionally, the Board has regulatory responsibilities for oil and gas exploration and production activities in Canada Lands[1] not otherwise regulated under joint federal/provincial accords. These regulatory responsibilities are set out in the Canada Oil and Gas Operations Act (COGOA), and the Canada Petroleum Resources Act (CPRA).

The NEB conducts environmental assessments (EA) during its review of applications for projects under its jurisdiction. For certain projects, an EA is also required by federal legislation, such as the Canadian Environmental Assessment Act 2012 (CEAA 2012), the Mackenzie Valley Resource Management Act, and the Inuvialuit Final Agreement or the Nunavut Land Claims Agreement. Certain 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 NEB-regulated facilities and activities.

The Board also monitors aspects of energy supply, demand, production, development and trade that fall within the jurisdiction of the federal government. The Board reports to Parliament through the Minister of Natural Resources.

Strategic Outcome(s) and Program Alignment Architecture

  • 1. Strategic Outcome: The regulation of pipelines, power lines, energy development and energy trade contributes to the safety of Canadians, the protection of the environment and efficient energy infrastructure and markets, while respecting the rights and interests of those affected by NEB decisions and recommendations.
    • 1.1 Program: Energy Regulation Program
      • 1.1.1 Sub-Program: Energy Regulation Development
      • 1.1.2 Sub-Program: Energy Regulation Implementation, Compliance Monitoring and Enforcement
    • 1.2 Program: Energy Information Program
    • Internal Services

Organizational Priorities

Organizational Priorities

Priority - Energy Regulation - Continual improvement of safety and environmental outcomes
Priority Type[2] Strategic Outcome(s) [and/or] Program(s)
Continual improvement of safety and environmental outcomes. Previously committed to Energy Regulation
Summary of Progress
  • Implemented changes to the NEB Act resulting from the Government’s plan for Responsible Resource Development as enacted by the Jobs, Growth and Long-Term Prosperity Act and the Economic Action Plan (2012). In 2013-14, the NEB:
    • Developed and implemented administrative monetary penalties (AMPs) framework to promote compliance with the NEB Act;
    • Increased planned inspections for regulated companies from 100 to 150 (conducted 153); and
    • Doubled the number of comprehensive audits from three to six.
  • As a key component of the NEB’s Action Plan on Safety and Environmental Protection, the Board held a Safety Forum in June 2013. The event facilitated dialogue among experts, academics, landowners, youth, industry leaders, and regulators on safety management and opportunities to improve safety outcomes. Several key areas were identified to support safety and environmental protection, including efforts to advance safety culture; provide greater online transparency and access to facility locations, product type, and performance data; improve collaboration with other North American regulators; and, enhance understanding of human and organizational factors related to process safety outcomes.
  • Developed and publicly released the draft Safety Culture definition and framework (in concert with the Canada-Nova Scotia Offshore Petroleum Board and the Canada-Newfoundland and Labrador Offshore Petroleum Board) to raise awareness and understanding of the role that organizational culture plays in preventing catastrophic events. The public consultation process was completed 30 January 2014.[3]
  • Built internal capacity related to management system regulatory oversight (inspectors, auditors, and other staff). There will be additional need for audit staff, staff to support investigations, and senior staff to support more sophisticated compliance work. Potential pipeline mega projects will also require unprecedented levels of NEB oversight.
  • Increased focus on data management with a view of enhancing the collection and analysis of data on pipeline performance and the causes of unsafe situations and/or non-compliance:
    • The Board developed and implemented processes for data analysis which enabled faster and more robust reporting and trending on incidents and increased transparency. This information will gain importance given increased levels of public interest. Future analysis undertaken will be critical for informing the NEB’s compliance and enforcement program and ensuring resources are effectively and efficiently targeted at the right issues and risks.
    • The Safety and Environmental Performance Dashboard went live on the NEB website in March 2014, which presents key industry performance data and information and makes this information easily available to Canadians.
  • A Memorandum of Understanding (MOU) with the Department of Fisheries and Oceans (DFO) that would transition assessment of fisheries impacts on NEB projects from DFO to the NEB was signed in December 2013. Applications are being assessed under the new MOU. The NEB is working with DFO on further implementation details.
  • As a result of the Jobs, Growth and Long-term Prosperity Act, amendments were made to the NEB Act and COGOA. These changes require the Board to consider project effects on navigation and navigation safety for NEB-regulated pipeline and power line crossings of navigable waters before recommendations or decisions are made under s. 52 and 58 of the NEB Act and s. 5.1 of COGOA. The amendments to the NEB Act and COGOA were enacted through an Order in Council, which was issued in the Canada Gazette, Part II on 3 July 2013.
    • To ensure an effective transition of these responsibilities between Transport Canada and the NEB, the organizations signed an MOU that describes the cooperative relationship between the organizations, as well as providing guidance on when a project is regulated by the NEB or Transport Canada.
    • As a result of the legislative change, the NEB now performs reviews of project effects on navigation and navigation safety for pipeline and power line crossings of navigable waters.
  • In 2012, Parliament provided the NEB with an additional $13.5 million[4] in multi-year funding to enhance the number and frequency of inspections of oil and gas pipelines, increase the number of audits of pipeline company programs, enable more complete follow-up on corrective actions and undertake comprehensive investigations of root causes of incidents. This provided the NEB  with additional “boots on the ground” to conduct a suite of compliance verification activities (CVAs) including inspections, audits, evaluations of emergency exercises and technical meetings to verify the pipelines we regulate are operating safely. In 2013-14, the Board conducted over 280 CVAs in addition to increasing the number of inspections for regulated companies and doubling the number of audits of pipeline company programs. Following up on these safety activities to ensure compliance and address issues which come to light as a result of inspections, audits and investigations will require additional work. As pipelines age, and new pipeline development increases, additional compliance verification will also be required.
  • As a result of compliance verification activities, the NEB issued 21 active safety orders that are used to impose preventative measures to ensure the safety of workers and the public and/or to protect property and the environment.
Priority - Energy Regulation - A robust regulatory framework for the North
Priority Type Strategic Outcome(s) [and/or] Program(s)
A robust regulatory framework for the North. Previously committed to Energy Regulation
Summary of Progress
  • The NEB is committed to strengthening its regulatory framework for the North to ensure that future decisions on applications will address the safety of workers and the public and the protection of the environment. Carrying on this commitment, in 2013-14:
    • The NEB actively engaged Northerners and Northern institutions that could be affected by potential activities, in support of shared safety and environmental protection objectives;
    • NEB staff traveled to the Northwest Territories, Inuvialuit Settlement Region, and Nunavut to meet with hunters and trappers, Aboriginal leadership and co-management boards. Continued engagement has developed trust and credibility among Northerners and Northern institutions; and
    • Members of the Board and NEB staff visited the Mackenzie Delta as well as communities in the Beaufort Sea and Baffin Island to better understand the Northern way of life.
  • Clarified our expectations of regulated companies through the development of guidance:
    • Released Filing Requirements for Onshore Drilling Operations Involving Hydraulic Fracturing;
    • Continuing to develop Filing Requirements for Geoscience Programs;
    • Continuing to develop an Audit Protocol for the Drilling and Production Regulations to clarify how the Board will audit management system requirements in the North; and
    • Continuing to develop Standby Vessel Guidance in collaboration with Offshore Boards and the supply vessel industry to promote industry best practice
  • Joined FracFocus.ca, which is a collaboration between provinces, territories, regulators and industry to provide Canadians with objective information on hydraulic fracturing and what legislation and regulations are in place to protect the environment including groundwater, and transparency on the ingredients that make up hydraulic fracturing fluids. Additionally, we requested operators regulated under COGOA to submit information on hydraulic fracturing fluid composition, 30 days after hydraulic fracturing operation has finished, for disclosure on FracFocus.ca.
  • Continued work on the Frontier and Offshore Regulatory Renewal Initiative (FORRI[5]), which includes the modernization of existing operational regulations under COGOA.
  • Completed devolution of oil and gas regulatory functions to the Government of the Northwest Territories (GNWT) and signed a Service Agreement to allow the NEB to provide GNWT with technical services and advice to support projects, and transfer records post-devolution.
Priority - Energy Regulation and Internal Services - A flexible and efficient organization able to meet new and ongoing priorities
Priority Type Strategic Outcome(s) [and/or] Program(s)
A flexible and efficient organization able to meet new and ongoing priorities. Previously committed to Energy Regulation,
Internal Services
Summary of Progress

Changes to the NEB Act resulting from the Government’s plan for Responsible Resource Development, as enacted by the Jobs, Growth and Long-Term Prosperity Act imposed time limits and the requirement to ensure timely handling of applications. As well, an increase in industry activity is resulting in unprecedented demand on NEB services. A flexible and efficient organization is required for the Board to achieve its strategic outcome and priorities in an effective and efficient manner. In support of meeting our third strategic priority, the NEB:

  • Strengthened the Board’s integrated planning process to better link financial and human resource allocations to programs and outcomes. The NEB developed and communicated an organizational Integrated Business Plan, which leaders can refer to during the year to align business unit initiatives with what matters most. As the year evolves and priorities change or emerge, the plan offers a foundation from which priorities can be adjusted and resources realigned, while managing work-life balance at the NEB. The Integrated Business Plan captures our strategic priorities, key corporate risks, key focus areas and drivers, and links them to our planned activities for the fiscal year.
  • Strengthened the NEB’s risk management processes and their integration with strategic planning. The NEB has a formal Integrated Risk Management Policy in place, and an environmental scan, risk identification and risk assessment is completed annually. The status of risks and mitigation activities identified in the Corporate Risk Profile are reviewed quarterly.
  • Assessed and addressed current and emerging resource needs in light of record demand on NEB services:
    • Monitored activity levels to ensure resource planning was strategically managed;
    • Regularly reviewed organizational priorities in light of available staff resources; and
    • Reviewed NEB’s People Strategy and staffing plans throughout the year.
  • Updated the Business Continuity Framework so that the delivery of essential services is not compromised by external events. In the summer of 2013, the NEB activated its Business Continuity Plan in response to the flooding of Southern Alberta and ensured continuity of service to Canadians without interruption.
  • Implemented new ways of doing business that strengthened processes and streamlined work:
    • Developed an online portal for Applications to Participate, which has received positive feedback from testers;
    • Introduced NEB 101 videos on topics including our hearing process, participant funding, and an overview of the NEB, to promote information sharing and access to the NEB processes;
    • Improved the Land Matters section of the NEB website to provide better information in a simpler format;
    • Introduced more dynamic project websites for hearings including subscription forms to sign up for process updates; and
    • Further implementation of web-ex in application engagement and oral hearings to reach larger audiences, reduce costs and improve process efficiencies.
  • Enhanced our strategic issues management capacity to anticipate, identify, assess and respond to issues, and to provide a corporate-wide, single-window approach to escalating issues. This enhancement will help ensure NEB’s leadership is aware of potential issues and the linkages between them. Increased public interest will drive a need for improving this strategic approach to communications and enhanced community relations.
  • Developed the NEB Communications Strategy, which better defines and focuses Board activity relating to proactive public engagement, media relations and stakeholder outreach. A reorganized and proactive communications function will be more aligned to the Board’s regulatory responsibilities. The Government of Canada relies upon the NEB hearings process to the extent possible to ensure that its obligations with regard to Aboriginal engagement and consultation are discharged with respect to a project. To manage increasing interest by Aboriginal peoples, the NEB, the through its enhanced Aboriginal engagement activities, is engaging communities well before the beginning of a hearing process. This helps to identify potential issues and ensure that Aboriginal peoples have the information required to meaningfully participate in the hearing process.
  • Continued to use multi-stakeholder advisory committees, such as the Land Matters Group[6], established by the Board to increase the dialogue amongst members of the public, Aboriginal groups and industry who have an interest in land matters and are impacted by the activities of NEB-regulated companies. The Land Matters Group met several times during the year and discussed topics including proposed changes to Damage Prevention Regulations, Safety Culture Framework, NEB’s online Application to Participate form, and AMPs.

Risk Analysis

Key Risks

Risk Analysis
Risk Risk Response Strategy Link to Program Alignment Architecture

Environmental protection and safety:

There is a risk of an incident with respect to NEB-regulated company activities resulting in a serious injury, fatality(ies) or significant environmental damage.

  • Monitored compliance through risk-informed verification activities, including concerns identified through the investigation of incidents and from the public.
  • Doubled the number of audits conducted, and increased planned inspections from 100 to 150 per year, as a result of the Jobs, Growth and Long-term Prosperity Act.
  • Monitored and analyzed emerging risks and trends within regulated companies’ operating environments.
  • Compliance staff are competent and have required training to perform duties.
  • A corrective action plan is in place for monitoring (or follow-up) for compliance verification activities.

Risk identified in the 2013-14 RPP

Strategies were effective in reducing risk exposure

Energy Regulation

Resource Constraints:

There is a risk that the volume of applications and demand on programs will be higher than expected.

  • Monitored activity levels to ensure resource planning was strategically managed throughout the year.
  • Regularly reviewed NEB priorities considering available staff resources.
  • Reviewed our People Strategy and staffing plan during the year.

Risk identified in the 2013-14 RPP

Strategies were effective in reducing risk exposure

Energy Regulation

Energy Information

Internal Services

Loss of reputation as a regulator:

There is a risk that the Board will be unable to maintain public confidence if its actions are not considered expert, efficient, effective and independent.

  • Continued to issue responsive, unbiased, transparent and evidence-based decisions.
  • Strengthened data management processes in support of robust regulatory compliance.
  • Established a system of AMPs to promote compliance with the NEB Act.
  • Made all compliance and enforcement actions public on the NEB website.

Risk identified in the 2013-14 RPP

Strategies were effective in reducing risk exposure

Energy Regulation

Changes in public interest:

There is a risk that the public interest changes in a way that leaves the Board unable to factor those changes in a timely manner when it carries out its statutory mandate.

  • Developed a robust, proactive Strategic Communications Plan to identify, plan and address stakeholder engagement opportunities with a focus on enhancing the Board’s reputation as a strong federal regulator.
  • Monitored trends via reports, media and political debates and engaged stakeholders to ensure their views were heard.

Risk identified in the 2013-14 RPP

Strategies were effective in reducing risk exposure

Energy Regulation

Inability to recruit and retain staff:

There is a risk that the NEB will be unable to compete with industry and other employers to attract and retain the skilled staff required to deliver its mandate.

  • Continued to measure employee engagement and work-life balance and effectiveness of improvement plans.
  • Continued to provide training and development opportunities to ensure competent staff and a challenging work environment.
  • Regularly reviewed People Strategy and staffing plan.
  • Maintained status as a “Top 100” employer.

Risk identified in the 2013-14 RPP

Strategies were effective in reducing risk exposure

Energy Regulation

Energy Information

Internal Services

Inability to deliver effective internal services:

There is a risk that an ineffective alignment of the Board’s internal services and regulatory programs will impact the NEB’s ability to proactively manage program delivery and internal and external changes.

  • Continued to strengthen internal/administrative functions, including Integrated Business Planning, Risk Management, and program evaluation.

Risk identified in the 2013-14 RPP

Strategies were effective in reducing risk exposure

Internal Services

Environmental protection and safety continued to be of paramount importance to the NEB and to Canadians. The NEB employs a risk-informed compliance verification program, which considers resource requirements to perform compliance activities and ensure those activities are completed in accordance with the plan. Corrective actions were monitored and regulated companies’ operating environments observed for emerging risks and trends. In addition to increasing the number of inspections and audits we conducted, the NEB’s AMPs framework provided the NEB with additional enforcement mechanisms.

The NEB is responsive to Canadians’ increased interest in the energy industry and the safety and environmental impacts of energy pipeline incidents. This fiscal year, our staff responded to 612 media requests, up from 282 the prior year. We also developed a comprehensive Communications Strategy to proactively plan for and engage in enhanced stakeholder engagement, with a focus on increasing Canadians’ confidence in the NEB as a strong federal regulator.

We ensured we heard and considered stakeholders’ views in various ways, including working with the Land Matters Group, monitoring trends present in public reports, media and political debates, issuing responsive, unbiased, transparent and evidence-based decisions, strengthening our data management processes in support of robust regulatory compliance, and making all compliance and enforcement actions public on the NEB website.

The NEB also continued to meet face-to-face with communities across the country, and this year employed social media to increase outreach, by introducing the NEB Twitter account. Since its launch, the NEB has steadily gained followers, including community leaders, journalists and environmental non-governmental organizations.

The skills and experience needed by the NEB continued to be in high demand due to private sector demand in Calgary and increased workloads at the NEB. In response to these conditions, the NEB regularly reviewed its People Strategy and staffing and recruitment. Additionally, the NEB measured employee engagement and work-life balance on a quarterly basis, which informed leadership decisions on areas of focus and assisted in responding to staff concerns and interests. Staff development was supported with access to training opportunities and access to new career opportunities in a challenging work environment.

Actual Expenditures

Budgetary Financial Resources (dollars)
2013-14
Main Estimates
2013-14
Planned Spending
2013-14
Total Authorities
Available for Use
2013-14
Actual Spending
(authorities used)
Difference
(actual minus planned)
62,436,291 66,900,000 86,299,363 81,682,681 14,782,681
Human Resources (Full-Time Equivalents [FTEs])
2013-14
Planned
2013-14
Actual
2013-14
Difference
(actual minus planned)
427.6 425.3 -2.3
Budgetary Performance Summary for Strategic Outcome(s) and Program(s) (dollars)
Strategic Outcome(s), Program(s) and Internal Services 2013-14
Main Estimates
2013-14
Planned Spending
2014-15
Planned Spending
2015-16
Planned Spending
2013-14 Total Authorities Available for Use 2013-14
Actual Spending (authorities used)
2012-13
Actual Spending (authorities used)
2011-12
Actual Spending (authorities used)
Strategic Outcome 1: The regulation of pipelines, power lines, energy development and energy trade contributes to the safety of Canadians, the protection of the environment and efficient energy infrastructure and markets, while respecting the rights and interests of those affected by NEB decisions and recommendations.
Energy Regulation 33,618,378 38,600,000 56,018,272 46,581,292 49,664,458 47,970,746 44,125,872 34,867,506
Energy Information 7,810,511 8,100,000 6,820,972 5,831,489 5,665,194 6,156,305 5,974,560 8,259,353
Subtotal 41,428,889 46,700,000 62,839,244 52,412,781 55,329,652 54,127,051 50,100,432 43,126,859
Internal Services Subtotal 21,007,402 20,200,000 21,824,229 16,740,529 30,969,711 27,555,630 19,445,209 21,248,754
Total 62,436,291 66,900,000 84,663,473 69,153,310 86,299,363 81,682,681 69,545,641 64,375,613

The variance between the Planned Spending and the Total Authorities for 2013-14 ($19.4 million) is mainly due to the following changes during the reporting period:

  • Increase in authority ($12.4 million) due to approval of the office move to Center 10 Treasury Board submission,
  • Increase in authority ($8.5 million) due to the approval of new Collective Agreement in December 2013 with retroactive pay back to 01 November 2011, and
  • Increase in authority ($1.2 million) due to year-end adjustment to statutory employee benefit plan expenditures, offset by:
  • Lower than anticipated Operating Budget Carry Forward (OBCF) from 2012-13 to 2013-14 ($1.4 million), and
  • Lower than anticipated Eligible Paylist Expenditures ($1.3 million) from Treasury Board Vote 30.

The variance between the Total Authorities and the Actual Spending for 2013-14 ($4.6 million) is mainly due to the following changes during the reporting period:

  • Lapse of $1.8 million relating to the Participant Funding Program
  • Lapse of $1.0 million for the office move to Center 10
  • Lapse of $0.7 million in salary - due to difficulty in the hiring of temporary Safety and Public Awareness FTEs approved in fiscal year 2012-2013
  • Lapse of $0.5 million in the Hearing budget - Trans-Mountain expansion delayed to next fiscal year, and
  • Lapse other O&M of $0.5 million - miscellaneous expenses throughout the organization.

Planned spending for 2014-15 and 2015-16 differs from the amounts stated in the Report on Plans and Priorities 2013-14 due to:

  • Fiscal 2014-15 - The RPP indicated planned spending of $65.5 million; the $19.2 million increase is due to: Office move to Center 10 ($8.3 million); Collective Agreement ($7.2 million); One-time payment of Severance Pay ($4.1 million); and, reduction in employee benefit plan expenditures ($0.4 million).
  • Fiscal 2015-16 - The RPP indicated planned spending of $63.3 million; the $5.9 million increase is due to: Collective Agreement ($7.2 million), partially offset by lower forecast Eligible Paylist expenses ($0.9 million) and a reduction in employee benefit plan expenditures ($0.4 million).

Alignment of Spending With the Whole-of-Government Framework

Alignment of 2013-14 Actual Spending With the Whole-of-Government Framework (dollars)
Strategic Outcome Program Spending Area Government of Canada Outcome 2013-14 Actual Spending
The regulation of pipelines, power lines, energy development and energy trade contributes to the safety of Canadians, the protection of the environment and efficient energy infrastructure and markets, while respecting the rights and interests of those affected by NEB decisions and recommendations. Energy Regulation Economic Affairs Strong Economic Growth 47,970,746
Energy Information Economic Affairs Strong Economic Growth 6,156,305
Total Spending by Spending Area (dollars)
Spending Area Total Planned Spending Total Actual Spending
Economic Affairs 46,700,000 54,127,051
Social Affairs 0 0
International Affairs 0 0
Government Affairs 0 0

Departmental Spending Trend

Departmental Spending Trend Graph

Text description of this graph

Departmental Spending Trend

This bar graph shows the National Energy Board’s planned and actual spending for the fiscal years 2011-12 to 2016-17.

Total Spending and planned spending by period is as follows:

  • 2011-12: $64 million
  • 2012-13: $70 million
  • 2013-14: $82 million
  • 2014-15: $85 million
  • 2015-16: $69 million
  • 2016-17: $69 million

The increase in actual spending in 2013-14 ($12.0 million) is due mainly to the actual cost of the office move to Center 10 ($11.3 million) and retroactive pay received once our new Collective Agreement was approved in December 2013 ($0.7 million).

The increase of $3.0 million for total planned spending in 2014-15 is due to an increase in eligible pay list items of $4.5 million related to the expiration of the employee severance pay program as well as an additional $1.5 million in Participant Funding Program spending to support the Trans-Mountain expansion. These increases are partially offset by a $3.0 million reduction in spending related to the NEB relocation.

The decrease of $15.5 million for the last two planning fiscal years from fiscal year 2014-15 is mainly due to the funding for the office move to Center 10 expiring in fiscal year 2014-15 ($8.3 million), the one-time payment of severance pay ($5.0million) in fiscal year 2014-15 and the decrease of $2.2 million in our Participant Funding Program (Trans Mountain).

Estimates by Vote

For information on the National Energy Board’s organizational Votes and statutory expenditures, consult the Public Accounts of Canada 2014 on the Public Works and Government Services Canada website.

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