National Energy Board - 2016-2017 - Report on Plans and Priorities - Section I: Organizational Expenditure Overview

Section I: Organizational Expenditure Overview

Organizational Profile

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

Chair and CEO: C. Peter Watson, P. Eng. FCAE

Ministerial Portfolio: Natural Resources

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

Year of Incorporation / Commencement: 1959

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

The NEB conducts environmental assessments during its review of applications for projects under its jurisdiction. For certain projects, the Board also conducts environmental assessments as 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. 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

The NEB intends to modernize its Program Alignment Architecture and Performance Measurement Framework:

As part of the Chair and CEO’s efforts to modernize our organization, the NEB intends to request changes to its Program Alignment Architecture (PAA) and Performance Measurement Framework (PMF) to make them clearer and more transparent for Canadians. If made, these changes would help better support cost-recovery. These changes, if approved by the Minister of Natural Resources and the President of Treasury Board, will take effect in fiscal year 2017-18.

Some measures in the 2016-17 PMF have been updated to start the transition to a new PAA and PMF structure. Some of the new measures show “baseline to be determined (TBD)” as a target. The NEB will focus on quantifying the data to report on these measures in order to determine targets.

The NEB is a full lifecycle regulator with three key roles. We are an adjudicator of energy projects, we support the safety of Canadians and the environment through energy infrastructure and activity oversight, and we educate and engage Canadians through energy information. The new PAA and PMF will clearly reflect these roles.

By updating our PAA, and developing associated performance measures, the NEB will be able to show closer alignment between these roles and the expected performance of the NEB by Canadians.

This will also support the Government of Canada’s mandate to achieve required public trust through transparent and effective performance measures that will assess the impact of organizations.

Organizational Priorities

Priority: Lead Regulatory Excellence

Demonstrating regulatory leadership will improve public confidence in the NEB’s ability to fulfill its mandate, as well as facilitate stronger coordination and cooperation with our territorial, provincial, federal, and international counterparts. This priority reaches broadly across the entire organization and is based on continual learning and innovation, enhanced evaluation, and improved management systems. Excellence is the means for providing what Canadians expect and deserve: a fair, transparent and respectful regulator that delivers timely, high-quality results.

Regulatory excellence is not a static achievement but a perpetual pursuit. It is dynamic by nature. We are already a strong regulator, and are taking additional steps to define what regulatory excellence means for us as an organization. It is about shaping the NEB into a regulator that continually improves its work, builds strong relationships with stakeholders, and commits itself to serving the public interest. We will undertake a more comprehensive review of our processes and management systems to continually improve our capacity and results as a regulator.

Priority TypeFootnote 2 Previously Committed to

Key Supporting Initiatives
Planned Initiatives Start Date End Date Link to Department’s
Program Alignment Architecture
Define and develop a NEB-specific framework for regulatory excellence. April 2015 March 2016 1.1 Energy Regulation
1.2 Energy Information
Internal Services
Identify ways to continually improve our performance metrics and analytics to support organizational and regulatory decision-making March 2016 Ongoing 1.1 Energy Regulation
1.2 Energy Information
Internal Services
Implement a NEB-specific framework for regulatory excellence March 2016 Ongoing 1.1 Energy Regulation
1.2 Energy Information
Internal Services
Collaborate with other regulators for peer review and to test our understanding of regulatory excellence April 2015 Ongoing 1.1 Energy Regulation
1.2 Energy Information
Internal Services
Develop criteria and measures, as part of a framework, to evaluate an internal culture of safetyFootnote 3 and environmental protection April 2015 March 2017 1.1 Energy Regulation
1.2 Energy Information
Internal Services
Use strong governance and decision-making to implement an internal culture of safety and environmental protection April 2015 Ongoing 1.1 Energy Regulation
1.2 Energy Information
Internal Services

For more information on organizational priorities, see the Minister’s mandate letter on the Prime Minister of Canada’s website.

Priority: Take Action on SafetyFootnote 4

It is important that the NEB demonstrates to Canadians that the NEB holds companies accountable for safety. Actions in support of this priority will increase Canadians’ confidence that the NEB is effectively fulfilling its mandate.

The Pipeline Safety Act provided amendments to the NEBA and COGOA that strengthen expectations for safety and security of regulated pipelines and international power lines. It requires updates to the NEB’s Onshore Pipeline Regulations and promulgation of new regulations with respect to pipeline crossings and damage prevention. The NEB is committed to completing preparation for full implementation of the new provisions by June 2016 as required.

The NEB will continue its work to advance safety culture across regulated companies and the industry as a whole, in concert with effectively implemented safety management systems. This will include formal engagement with industry members and other regulatory agencies.

Emergency management is a key component of the NEB’s safety and environmental protection mandate. The NEB will focus on promoting and verifying regulated companies, municipalities and other first responders have clear and open communication so that they continue to be appropriately prepared for a coordinated and effective response to any emergency.

Priority TypeFootnote 5 Ongoing

Key Supporting Initiatives
Planned Initiatives Start Date End Date Link to Department’s
Program Alignment Architecture
Provide enhanced information on the status of conditions that have been placed on project approvals October 2015 December 2016 1.1 Energy Regulation
Identify and implement new tools for inspection officers to efficiently collect information from field inspections, and to facilitate compliance data analysis April 2015 July 2016 1.1 Energy Regulation
Improve the completeness, accuracy and timeliness of regulatory data April 2015 Ongoing 1.1 Energy Regulations
Complete preparations and undertake full implementation of legislative changes including new emergency response provisions, powers to inspect international power lines, and promulgation of new Damage Prevention Regulations June 2015 July 2016 1.1 Energy Regulation
Formulate indicators and tools to collect baseline intelligence on safety culture across industry December 2015 March 2017 1.1 Energy Regulation
Develop and implement plans for engaging municipal, provincial and federal governments to promote and support well-defined and coordinated emergency management systems January 2016 April 2017 1.1 Energy Regulation

For more information on organizational priorities, see the Minister’s mandate letter on the Prime Minister of Canada’s website.

Priority: Engaging with Canadians

There is a need to inform Canadians about the NEB’s role and its processes, and to demonstrate responsiveness and transparency.

Our engagement with Canadians goes beyond that which has been established through and guided by our application hearing processes. This means reaching out to Canadians and presenting ourselves as a whole, not just as the sum of regulatory processes. This means engagement along the full lifecycle of a project, across the whole of Canada, with responsive regional focus, on pipeline safety and environmental issues. It means more effective communication that is tailored to the intended audience, and is readily accessible by any stakeholder who wants it.

The NEB has established regional offices in Vancouver, Montréal and Yellowknife. The offices are part of an initiative to strengthen the NEB’s regional presence, raise awareness about our work, build stronger relationships with regional public and local institutions, communities, landowners and Indigenous groups; and to be in a position to more quickly respond to events requiring immediate NEB attention. These offices build upon our existing engagement efforts and move the organization forward to foster greater public confidence.

Priority TypeFootnote 6 Previously Committed to

Key Supporting Initiatives
Planned Initiatives Start Date End Date Link to Department’s
Program Alignment Architecture
Implement public engagement framework including the development of regional engagement plans and strategies for engaging key stakeholder groups April 2016 March 2017 1.1 Energy Regulation
1.2 Energy Information
Continue to mobilize regional presence through staffing of regional offices April 2016 September 2016 1.1 Energy Regulation
1.2 Energy Information
Modernize web presence and engagement tools April 2016 March 2017 1.1 Energy Regulation
1.2 Energy Information
Continue to provide Canadians with accurate, timely and relevant energy information April 2016 Ongoing 1.1 Energy Regulation
1.2 Energy Information

For more information on organizational priorities, see the Minister’s mandate letter on the Prime Minister of Canada’s website.

Risk Analysis

Key Risks
Risk Risk Response Strategy Link to Program Alignment Architecture
Incident at a regulated company resulting in serious injury, fatality or significant environmental damage

The NEB will strengthen current controls, implement additional controls and monitor their effectiveness in mitigating this risk.

  • Completion of Compliance Verification Activities (including inspections and audits) according to the NEB’s risk-informed Compliance Verification Plan
  • Formulate indicators and tools to collect baseline intelligence on safety culture across industry
Energy Regulation Program
Inaccurate or incomplete public portrayal of NEB

The NEB will strengthen current controls, implement additional controls and monitor their effectiveness in mitigating this risk.

  • Implement public engagement framework including the development of regional engagement plans and strategies for engaging key stakeholder groups
  • Increase regional presence through staffing of regional offices
  • Provide Canadians with accurate, timely and relevant energy information in new and innovative ways
Energy Regulation Program

Energy Information Program
Alignment of Information Technology/Information Management (IT/IM) plans and business strategies

The NEB will strengthen current controls, implement additional controls and monitor their effectiveness in mitigating this risk.

  • Utilize centralized direction and control for managing IT assets, IT spending, technology choices and application development.
Energy Regulation Program
Internal Services

The NEB continues to work in a changing environment. The organization’s responsibilities are informed by a wide array of factors including  emerging industry developments, the proactive consideration of safety, environmental, societal, and economic trends that shape the Canadian public interest.

The NEB regulates approximately 73,000 kilometers of interprovincial and international pipelines - nearly enough pipeline to wrap around the earth twice. In 2015, the more than 100 pipelines regulated by the NEB, shipped approximately $96 billion worth of crude oil and petroleum products, natural gas liquids and natural gas to Canadians and export customers. The NEB also regulates approximately 1,400 kilometres of international power lines, almost the distance between Yellowknife to Regina. These are owned by over 30 companies and transmitted approximately $3.3 billion of electricity into and out of Canada.

While over 99 per cent of energy products are transported safely in Canada, there is, nonetheless, a possibility that an incident at a NEB-regulated company resulting in serious injury, fatality or significant environmental damage could occur. This risk arises from several factors including the varying maturity of management systems and safety culture at NEB-regulated companies. The safety of Canadians and protection of the environment are the NEB’s top priorities and the risk response strategy in the table above will help the NEB ensure that energy infrastructure is the very safest it can be.

Parliamentarians and members of the public have shown increased and ongoing interest in the energy industry, the safety of pipelines, and the environmental impacts of pipeline incidents. The NEB recognizes these interests and the need to further its communications and engagement efforts to help Canadians better understand energy information, regulatory processes and the role of the NEB as a lifecycle regulator. If the organization does not do this effectively, it runs the risk of inaccurate or incomplete public portrayal of the NEB. To mitigate this risk, the NEB plans to complete a number of actions in 2016-17 including implementing a public engagement framework, increasing its regional presence and providing Canadians with accurate, timely and relevant energy information in new and innovative ways.

As the NEB pursues its priority of leading regulatory excellence, it continues to address the risk that its IT/IM plans and business strategies may not be completely in alignment. Maximizing alignment of IT/IM plans with business strategies is critical to ensure that the NEB can deliver on its program objectives while achieving best value for money and incorporating the evolving mandate of Shared Services Canada. The NEB will work throughout the year to mitigate this risk by utilizing centralized direction and control for managing IT assets, IT spending, technology choices and application development.

Planned Expenditures

Budgetary Financial Resources (dollars)
2016-17
Main Estimates
2016-17
Planned Spending
2017-18
Planned Spending
2018-19
Planned Spending
89,425,447 93,605,275 73,845,445 72,183,499
Human Resources
(Full-Time Equivalents [FTEs])
2016-17 2017-18 2018-19
495.4 449.6 444.6
Budgetary Planning Summary for Strategic Outcome(s) and Program(s) (dollars)
Strategic Outcome(s), Program(s) and Internal Services 2013-14
Expenditures
2014-15
Expenditures
2015-16
Forecast
Spending
2016-17
Main
Estimates
2016-17
Planned
Spending
2017-18
Planned
Spending
2018-19
Planned
Spending
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 Energy Regulation Program 47,970,746 45,310,493 49,248,625 58,584,596 61,322,894 44,906,857 45,317,757
1.2 Energy Information Program 6,156,305 6,567,390 7,094,363 7,307,066 7,648,605 7,018,161 5,160,645
Subtotal 54,127,051 51,877,883 56,342,988 65,891,662 68,971,499 51,925,018 50,478,402
Internal Services Subtotal 27,555,630 35,443,200 31,280,520 23,533,785 24,633,776 21,920,428 21,705,097
Total 81,682,681 87,321,083 87,623,508 89,425,447 93,605,275 73,845,446 72,183,499

The NEB is funded through parliamentary appropriations. The Government of Canada recovers approximately 95 per cent 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.

Planned spending in 2016-17 includes $3.3M for our expected operating budget carry forward and $0.9M for Eligible Paylist expenses.

Planned spending in 2017-18 decrease by $19.8M or 21% mainly due to:

  • Funding received in 2012-13 to enhance NEB safety and security programs as well as public awareness will cease at the end of 2016-17 ($5.7M) and most of the funding received through BUDGET 2014 for Mega Projects will also cease at the end of FY 2016-17 ($6.35M).
  • Decrease of $0.65M in our PFP allocation due to TMX completion in 2016-17.
  • The O&M portion of BUDGET 2015 is front-end loaded to ramp-up the Safety & Environmental Protection and Engaging with Canadians initiatives with contracting and training which decreases $4.0M in 2017-18.
  • We have not accounted for a carry forward from 2016-17 to 2017-18 ($3.3M) as we expect to spend our full appropriation in 2016-17.
  • Employee Benefit Plan to decrease by $0.23M in 2017-18 from 2016-17.

Planned spending in 2018-19 decrease of $1.7M is mainly due to the 5 FTEs re-profiled from 2014-15 and linked to Mega Projects which are expiring and a reduction in O&M from BUDGET 2015 linked to Safety & Environment Protection.

Alignment of Spending With the Whole-of-Government Framework

Alignment of 2016-17 Planned Spending With the Whole-of-Government Framework (dollars)
Strategic Outcome Program Spending Area Government of Canada Outcome 2016-17
Planned
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 61,322,894
  1.2 Energy Information Economic affairs Strong economic growth 7,648,605
Total Spending by Spending Area (dollars)
Spending Area Total Planned Spending
Economic Affairs 68,971,499
Social Affairs -
International Affairs -
Government Affairs -

Departmental Spending Trend

Departmental Spending Trend Graph

Departmental Spending Trend Graph

Text description of this graph

Spending Trend

This bar chart shows the National Energy Board’s six-year spending trend. It includes actual spending for the fiscal years 2013-14 and 2014-15, forecast spending for the year 2015-16 and planned spending for the years 2016-17 to 2018-19.

Actual Spending by period is as follows:

  • 2013-14: $81.7 million
  • 2014-15: $87.3 million

Forecast Spending by period is as follows:

  • 2015-16: $87.6 million

Planned Spending by period is as follows:

  • 2016-17: $93.6 million
  • 2017-18: $79.5 million
  • 2018-19: $77.9 million

The above graph represents NEB's actual and planned spending from 2013-14 to 2018-19.

For 2013-14 and 2014-15, spending represents the actual expenditures as reported in the Public Accounts. For fiscal year 2015-16, spending represents forecasted expenditures as of the end of November 2015. For the period 2016-17 to 2018-19, spending reflects approved funding by Treasury Board to support our main strategic outcome as well as anticipated renewals of some programs sunsetting past 2016-17: Safety Submission ($5.2M) and Public Awareness ($0.5M).

As indicated in the chart above, NEB's forecasted spending for 2015-16 is at par with last fiscal year spending.

For the explanation on variances in planned spending between 2016-17 and 2018-19, refer to the analysis included in the Planned Expenditures section earlier in this document.

Estimates by Vote

For information on the National Energy Board’s organizational appropriations, consult the 2016-17 Main Estimates on the Treasury Board of Canada Secretariat website.

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