National Energy Board - 2014-2015 Departmental Performance Report - Section I: Organizational Expenditure Overview

Section I: Organizational Expenditure Overview

Organizational Profile

Appropriate Minister: The Honourable Jim Carr, P.C., M.P.

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

Ministerial Portfolio: Natural Resources

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

Year of Incorporation / Commencement: 1959

Organizational Context

Raison d’être

The National Energy Board (NEB or the Board) is an independent federal, quasi-judicial regulator 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 inter-provincial power lines; and
  • Imports of natural gas and exports of crude oil, natural gas liquids (NGL), natural gas, refined petroleum products and electricity.

Additionally, in specified areasFootnote 1 the Board has regulatory responsibilities for oil and gas exploration and production activities under the National Energy Board Act, the Canada Oil and Gas Operations Act (COGOA), the Canada Petroleum Resources Act (CPRA), and the Northwest Territories’ Oil and Gas Operations Act (OGOA) and Petroleum Resources Act (PRA).

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 designated 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. 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 TypeFootnote 2 Strategic Outcome(s)
[and/or] Program(s)
Continual improvement of safety and environmental outcomesFootnote 3 Previously committed to Energy Regulation
Summary of Progress

Safety and environmental protection are of paramount importance to the Board. As an independent federal regulator, the Board regulates safety and security, environmental protection and economic efficiency in the Canadian public interestFootnote 4 within the mandate set by Parliament. The Board is committed to strengthen and improve industry-wide performance and awareness of the role that safety culture plays in contributing to or building defences against incidents.

Progress for this organizational priority is linked to the Energy Regulation program, and Energy Regulation Implementation, Compliance Monitoring and Enforcement sub-program. Detailed performance analysis is included in Section II of this report.

  • Together with the Canada-Nova Scotia Offshore Petroleum Board and the Canada-Newfoundland and Labrador Offshore Petroleum Board, the NEB released a joint statement and framework on safety culture in June 2014. Advancing Safety in the Oil and Gas Industry - Statement on Safety Culture incorporates a definition, characteristics, and attributes of safety culture. During the year, the NEB engaged stakeholders to promote awareness of the NEB’s safety culture expectations.
  • Early work on safety culture indicators development began. These indicators will be evaluated to determine how to best integrate a select number of them into NEB compliance verification activities, with the ultimate goal of reducing incidents.
  • The NEB continued to improve internal systems and processes to collect, analyze and improve the use of regulatory data. This has helped the NEB to identify industry trends, determine how companies are performing towards safety and environmental performance targets and better inform NEB decisions and communications.
  • The NEB developed its regulatory information and analysis function, and enhanced its ability to provide high quality, evidence-based information for use in compliance verification and other regulatory processes.
  • In 2014-15, the NEB publicly reported on Administrative Monetary Penalties (AMPs). In the interest of greater public transparency around the issuance of AMPs, the NEB also began posting information related to Notices of Violation. This information includes the name of the company or individual believed to have committed a violation, the issue date, the region and facility, the nature of the violation, and the amount of the penalty.
  • The NEB streamlined the process of reporting by regulated companies of incidents and unauthorized activities. This year the NEB introduced the Online Event Reporting System (OERS) and provided additional guidance to companies regarding incident reporting (NEB Event Reporting Guidelines). The Transportation Safety Board of Canada also directed regulated pipeline companies to report events using this system. OERS ensures that both entities are able to access information for all reported events and significantly reduce the regulatory reporting burden on companies.
  • Throughout the year, the NEB produced easily accessible regulatory information on safety, environmental protection and energy markets. This information was proactively offered on the NEB website.
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 previously committed to reviewing and strengthening its regulatory framework for the North, to ensure that future decisions on applications are made in a manner that enhances the safety of workers and the public and the protection of the environment. Progress for this organizational priority is linked to the Energy Regulation Development sub-program. Detailed performance analysis is included in Section II of this report.

  • On 1 April 2014, the Government of the Northwest Territories (GNWT) assumed responsibility for onshore oil and gas activities in the Northwest Territories outside the Norman Wells Proven Area, and other miscellaneous lands. The NEB and GNWT signed a Service Agreement to allow the NEB to provide technical services and advice to support the GNWT’s regulatory functions for oil and gas projects, and transfer records post-devolutionFootnote 5.
  • The NEB updated filing requirements and guidance to clarify the NEB’s expectations of companies and how the public can get involved in NEB processes in the North.
  • The NEB engaged Northerners and Northern institutions that may be affected by potential activities regulated by the NEB, in support of meaningful and coordinated regulatory processes.
  • Staff continued to work with key players to improve preparedness in the event of an emergency incident in the North. This included collaboration with the Environmental Impact Review Board and offshore Boards, and regional, national and international spill response agencies.
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

Increased industry activity continued to result in high demand for NEB services this year. A nimble organization is required for the NEB to achieve its strategic outcome and priorities in an effective and efficient manner. Progress for this organizational priority is linked to the Energy Regulation Development and Energy Regulation Implementation, Compliance Monitoring and Enforcement sub-programs. Internal Services activities are also linked to this priority. Detailed performance analysis is included in Section II of this report.

  • The NEB continued to implement consequential legislative and regulatory changes.
  • The NEB reviewed and updated hearing and non-hearing application processes, including systems used to support the application processes, so that they are in place for staff to conduct a thorough and efficient review of upcoming major applications.
  • The NEB strategically enhanced communication with Canadians throughout the year, including through proactive information sharing and web presence.
  • Information management and information technology strategies were implemented to support regulatory and business processes. The NEB’s approach to data capture, storage, analysis and dissemination continued to evolve this year.
  • In June 2014, the NEB seamlessly relocated its head office to a new building, and transitioned to an open and modern workspace, consistent with Workplace 2.0 standards.
  • The NEB established service standards and performance measures for key internal services. The NEB measured client satisfaction in the areas of time to staff, time to contract, email system availability, service desk response times, media response times, and video conferencing user satisfaction. Cumulative performance targets were met and targets have been raised for 2015-16.

Risk Analysis

Key Risks

Risk Analysis
Risk Risk Response Strategy Link to Program Alignment Architecture

Due to several drivers such as an increase in the transportation of oil and gas products, there is a risk that an incident at a regulated company results in a fatality(ies) and/or significant environmental damage.

  • Monitored compliance through an increased number of risk-informed verification activities (335 in 2014-15, an increase from 282 in 2014-15).
  • Investigated and analyzed incidents, risks and trends within regulated companies' operating environments. Analysis informed risk-based compliance verification planning.
  • Inspection Officers applied enforcement tools for all issues of non-compliance.
  • Compliance staff competence maintained through required training and designations.
  • Development of the regulatory information and analysis function fed high quality information into the risk-based compliance verification planning process.
  • Communicated safety culture expectations to regulated companies.
    • Risk identified in the 2014-15 RPP
    • Strategies reduced risk exposure
1.1 Energy Regulation Program

Due to limited use of data standards combined with aging information systems, there is a risk that inaccurate, incomplete or inadequate information about NEB-regulated facilities or NEB operations is communicated to Canadians.

  • Carried out proactive and strategic outreach activities with stakeholders and media in Canadian communities interested in or affected by NEB activities.
  • Improved web-based information tools.
  • Produced accurate, reliable energy information products and made them available to external stakeholders and the public.
  • Implemented NEB Communication Strategy.
  • Applied a portfolio management approach to software deployment.
    • Risk identified in the 2014-15 RPP
    • Strategies reduced risk exposure
1.1 Energy Regulation Program

1.2 Energy Information Program

Due to an increase in resource demands driven by the number and scope of applications and hearings, there is a risk that they are not dealt with in a timely and expeditious manner and/or legislated time limits are not met resulting in a compromised predictability of the NEB’s regulatory processes.

  • Process in place outlining specific criteria defining potential hearing participants, which provides clarity on public participation at hearings to ensure efficiency.
  • Multi-business unit staffing plan ensured adequate staff for upcoming hearings using data from previous hearings. Hearings resourced on a monthly basis using multi-business unit input.
  • Constantly monitored applications to ensure compliance with expeditious handling legislation.
    • Risk identified in the 2014-15 RPP
    • Strategies reduced risk exposure
1.1 Energy Regulation Program

Due to a highly competitive labour market, there is a risk that key positions within the organization are vacant resulting in a loss of corporate knowledge and delays in regulatory processes.

  • Maintained status as a “Top 100” employer.
  • Measured employee work-life balance and management communication satisfaction, on a quarterly basis.
  • Conducted market surveys, as required, for employee pay, benefits, and attrition rates and compared with the NEB's rates.
  • Developed and actioned the NEB People Strategy, which is the NEB’s human resources plan. Plan focused on the attraction and retention needs of the organization.
    • Risk identified in the 2014-15 RPP
    • Strategies reduced risk exposure

Internal Services

The safety of Canadians and protection of the environment in the construction, operation and abandonment of pipeline facilities regulated by the NEB continue to be top priorities. The NEB has shared its safety culture expectations with companies to promote the common goal of zero incidents. The NEB conducted 335 compliance verification activities, including 192 inspections. The NEB conducted six audits to observe regulated companies’ operating environments to keep aware of emerging risks and trends, and the analysis informs the NEB’s risk-based compliance verification plans. The NEB has a suite of enforcement tools available to ensure regulated company compliance with rules and regulations that are designed to promote safety and protection of the environment.

In early 2015, the Chair and CEO embarked on a National Engagement Initiative, in an effort to demystify the NEB’s role and regulatory processes, while hearing from Canadians about regional energy matters. This is a first step in creating an ongoing dialogue to ensure information about the NEB’s role and mandate is communicated accurately.

The NEB proactively released online safety and environmental compliance information to Canadians regarding regulated company performance, and the reach of this information was expanded through our Twitter account and targeted communications products. Lastly, the NEB has taken a “detect and correct” approach to rectify inaccurate media coverage.

The NEB continued to meet legislated time limits in 2014-15, by constantly monitoring application process times and accessing our resource allocation plan.

The skills and experience needed to carry out the NEB’s mandate are critical to regulating in the Canadian public interest. In 2014-15, the NEB saw renewal in several senior leadership positions including a new Chair and CEO, Vice-Chair, Chief Operating Officer, and several Vice-Presidents and Directors. These highly-qualified professionals bring experience and commitment that energized the management team. The NEB regularly reviewed its People Strategy, staffing and recruitment levels, and resource needs throughout the year to remain a nimble organization during a time of change. The NEB continued to support and measure employee work-life balance and engagement, and encouraged employee learning and development as part of the organization’s people retention strategy.

Actual Expenditures

Budgetary Financial Resources (dollars)
2014-15
Main Estimates
2014-15
Planned Spending
2014-15
Total Authorities
Available for Use
2014-15
Actual Spending
(authorities used)
Difference
(actual minus planned)
71,316,050 84,663,473 92,482,848 87,321,083 2,657,610
Human Resources (Full-Time Equivalents [FTEs])
2014-15
Planned
2014-15
Actual
2014-15
Difference
(actual minus planned)
423.6 440.6 17.0
Budgetary Performance Summary for Strategic Outcome(s) and Program(s) (dollars)
Strategic
Outcome(s),
Program(s)
and Internal
Services
2014-15
Main
Estimates
2014-15
Planned
Spending
2015-16
Planned
Spending
2016-17
Planned
Spending
2014-15
Total
Authorities
Available
for Use
2014-15
Actual
Spending
(authorities
used)
2013-14
Actual
Spending
(authorities
used)
2012-13
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.
1.1 Energy Regulation Program 39,482,860 56,018,272 52,632,974 48,926,812 51,792,827 45,310,493 47,970,746 44,125,872
1.2 Energy Information Program 5,294,553 6,820,972 5,620,814 5,225,464 6,589,085 6,567,390 6,156,305 5,974,560
Subtotal 44,777,413 62,839,244 58,253,788 54,152,276 58,381,912 51,877,883 54,127,051 50,100,432
Internal Services Subtotal 26,538,637 21,824,229 19,296,723 17,445,245 34,100,936 35,443,200 27,555,630 19,445,209
Total 71,316,050 84,663,473 77,550,511 71,597,521 92,482,848 87,321,083 81,682,681 69,545,641

The NEB is funded through parliamentary appropriations. The Government of Canada recovers approximately 95 per centFootnote 6 of the appropriation from the regulated industry. The revenues are deposited directly into the Consolidated Revenue Fund. This process is regulated by the National Energy Board Cost Recovery Regulations.

The NEB’s planned spending of $84.7 million was adjusted during the fiscal year to reflect changes in authorities granted in Budget 2014 (primarily for mega-hearings and to a lesser extent Public Awareness activities), and adjustments to statutory items. The overall net increase of $7.8 million is a result of increases and decreases, as detailed below.

Increases included funding received in Budget 2014 ($6.5 million); Operating Budget Carry Forward ($2.6 million); and a year-end adjustment to our contributions to employee benefit plans ($1.2 million).

Decreases included the cash management of both the top-up to the Collective Agreement that expired 31 October 2014 ($2.1 million) and a portion of our Paylist Expenditures for 2014-15 ($0.4 million).

The NEB’s actual spending of $87.3 million compared to total authorities of $92.5 million resulted in a lapse of $5.2 million. This was primarily due to lapses in the Participant Funding program ($2.7 million), $2.25 million of which has been frozen so that funding for the TransMountain Expansion (TMX) project could be re-profiled to future fiscal years. The remaining lapse included the move to our new location ($1.2 million) and reprofiled funding related to delayed mega-hearing applications ($1.3 million).

Alignment of Spending With the Whole-of-Government Framework

Alignment of 2014-15 Actual Spending With the Whole-of-Government Framework (dollars)
Strategic Outcome Program Spending Area Government of Canada Outcome 2014-15 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. 1.1 Energy Regulation Economic Affairs Strong Economic Growth 45,310,493
1.2 Energy Information Economic Affairs Strong Economic Growth 6,567,390
Total Spending by Spending Area (dollars)
Spending Area Total Planned Spending Total Actual Spending
Economic Affairs 62,839,244 51,877,883
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 2012-13 to 2017-18.

Total Spending and planned spending by period is as follows:

  • 2012-13: $69.6 million
  • 2013-14: $81.6 million
  • 2014-15: $87.3 million
  • 2015-16: $77.6 million
  • 2016-17: $71.6 million
  • 2017-18: $59.1 million

For fiscal years 2012-13 to 2014-15, the figure represents the actual expenditures as reported in the Public Accounts.

The NEB’s expenditures in 2014-15 show an increase of $4.8 million over the prior year, mainly as a result of Budget 2014.

For the period 2015-16 to 2017-18, the figure represents the total planned spending as reported in the 2015-16 Report on Plans and Priorities. Safety and Public Awareness funding is scheduled to expire at the end of fiscal year 2016-17. One time funding for mega-hearings granted in Budget 2014 is due to expire at end of fiscal year 2016-17.

As per Budget 2015, $80 million has been approved for safety and environmental protection, and greater engagement with Canadians.

Expenditures by Vote

For information on the National Energy Board’s organizational voted and statutory expenditures, consult the Public Accounts of Canada 2015, which is available on the Public Works and Government Services Canada website.

 

Date modified: