ARCHIVED - National Energy Board - 2013-2014 - Report on Plans and Priorities - Section I: Organizational Overview

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Section I: Organizational Overview

Raison d’être

The National Energy Board is an independent federal, quasi-judicial, regulatory tribunal established  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 National Energy Board Act (NEB Act) and include regulating:

  • The construction, operation, and abandonment of pipelines that cross international borders or provincial 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, 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 and the Canada Petroleum Resources Act.

The NEB conducts an environmental assessment (EA) during its review of applications for facilities and activities under its jurisdiction. For certain projects, an EA is also required by federal legislation such as the Canadian Environmental Assessment Act, 2012 the Mackenzie Valley Resource Management Act, 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 (PAA)

The diagram below illustrates the NEB’s strategic outcome and program alignment architecture. The Board’s programs and sub-programs all contribute to achieving the strategic outcome.

Strategic Outcome, Programs and Sub-Programs
Text description of this graph

Description of Program Activity Architecture

This chart presents the strategic outcome, program activities and program sub-activities as a three-tiered diagram.

Tier 1 is a statement of the strategic outcome:
Pipelines, power lines, energy development and energy trade are regulated in the Canadian public interest.

Tier 2 presents the three programs to which the strategic outcome applies:
Program: Energy Regulation
Program: Energy Information
Program: Internal Services

Tier 3 presents the two sub-programs of the Energy Regulation program:
Sub-activity: Energy Regulation Development
Sub-activity: Energy Regulation, Compliance Monitoring and Enforcement

Organizational Priorities

The following organizational priorities will be the focus of the Board’s attention and resources during this reporting period. These priorities and the associated plans are aimed at continuing to deliver on the Board’s strategic outcome.

Priority - Continuous improvement of safety and environmental outcomes
Priority Type Program
Continuous improvement of safety and environmental outcomes. Previously committed to Energy Regulation
Description

Why is this a priority?

  • 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 interest within the mandate set by the Parliament of Canada.

Plans for meeting the priority

  • Implementation of 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):
    • Increase inspections and audits; and
    • Development and implementation of administrative monetary penalties (AMPs).
  • Continue to implement the Action Plan on Safety and Environmental Protection to promote building and maintaining safety cultures. The Board will be hosting a Safety Forum in June 2013. Key issues of this forum will include corporate leadership’s role in building and maintaining a safety culture, integration within management systems and effective safety performance measurement.
  • Develop data management to enhance the collection and analysis of data on pipeline performance and the causes of unsafe situations and non-compliance. This includes new leading performance measures as well as methods for analysis and improved information systems for data. This will enhance the Board’s ability to: select appropriate areas for regulatory action focus; perform risk modeling for compliance verification; and, demonstrate progress toward continued improvement of safety and environmental outcomes.


Priority - A robust regulatory framework for the North
Priority Type Program
A robust regulatory framework for the North. Previously committed to Energy Regulation
Description

Why is this a priority?

  • The NEB is the federal body responsible for regulating oil and gas exploration and production activities in Canada Lands[2] not otherwise regulated under joint federal/provincial accords. In 2011, the NEB conducted a comprehensive review of the regulatory framework for Arctic offshore drilling, which resulted in the development of filing requirements for offshore drilling in the Canadian Arctic (i.e., the Arctic Review). During the Arctic Review, the NEB committed to reviewing and strengthening its regulatory framework for the North to ensure that future decisions on applications will be made in a manner that addresses the safety of workers and the public and the protection of the environment.

Plans for meeting the priority

  • In addition to having a clear legal mandate and the authority it needs to regulate, the robustness of the NEB’s regulatory framework hinges on:
    • Proceeding with the NEB’s commitments related to the Arctic Review;
    • Continuing to develop trust and credibility among Northerners and Northern institutions through continued engagement;
    • Clarifying expectations of regulated companies through development of guidance; and,
    • Standardizing oversight tools to verify and compel compliance through improvements to the NEB compliance verification program.


Priority - A flexible and efficient organization able to meet new and ongoing priorities
Priority Type Program
A flexible and efficient organization able to meet new and ongoing priorities. Previously committed to Internal Services
Energy Regulation
Description

Why is this a priority?

  • Changes to the NEB Act resulting 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 expeditious handling of applications.
  • A nimble organization is required for the Board to achieve its strategic outcome and priorities in an effective and efficient manner.
  • An increase in industry activity is resulting in unprecedented demand on NEB services.

Plans for meeting the priority

  • Strengthen the Board’s integrated planning process to better link financial and human resource allocations to programs and outcomes;
  • Strengthen the NEB’s risk management processes and their integration with strategic planning;
  • Assess and address current and emerging resource needs through the Board’s Regulatory Resourcing Framework;
  • Update the Business Continuity Framework so that the delivery of essential services is not compromised by external events;
  • Implement new ways of doing business that strengthen processes and streamline work, e.g., online application system improvements;
  • Improve internal client services through the implementation of additional service standards and new integrated service delivery;
  • Enhance strategic issues management capacity; and,
  • Use multi-stakeholder advisory committees, e.g., Land Matters Group.


Risk Analysis

The NEB regulates approximately 73,000 kilometers of pipelines and about 1,400 kilometers of power lines across Canada. In 2011, these pipelines shipped approximately $104.8 billion[3] worth of crude oil and other hydrocarbons to Canadian and export customers. That same year, NEB-regulated international power lines transmitted approximately $2.1 billion of electricity into and out of Canada. Additionally, the Board’s regulatory responsibilities for oil and gas exploration and related activities cover Canada Lands[4] not otherwise regulated under joint federal/provincial accords.

To continually improve decision-making and facilitate strong management practices in this environment, the NEB integrates risk management in all functions across the organization. This integration occurs strategically and operationally. The key corporate-wide strategic risks facing the Board are listed below together with risk mitigation activities. All risks have the potential to affect the achievement of the NEB’s strategic outcome and expected results at the program level.

Environmental protection and safety: There is a risk of an incident with respect to NEB regu-lated company activities resulting in injury or environmental damage. This would be detrimental to those Canadians affected. Also, this could cause decreased confidence in the NEB as an effective regulator and a loss of reputation for the NEB and the Government of Canada. In response, the NEB is implementing a risk-informed compliance verification program. The NEB is also implementing a corrective action plan monitoring for compliance verification activities together with increasing the number of inspections and safety audits it conducts per year.

Resource constraints: There is a risk that the volume of applications and demand on programs will be higher than expected. New legislated time limits for the completion of assessments will require that the NEB ensure that adequate resources are efficiently allocated. In response, the NEB will regularly monitor workloads and priorities, reassigning resources as required. Staffing plans and internal hearing forecasts will be regularly reviewed and updated so that resources are available and in place.

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 statuary man-date. The public interest is inclusive of all Canadians and refers to a balance of economic, envi-ronmental and social considerations that changes as a society’s values and preferences evolve over time. In response, the Board will monitor change in the public interest using evidence filed with the Board, reports, media and policy debates, as well as engage stakeholders to ensure their views are understood resulting in the Board’s ability to adapt to changing public expectations.

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. In response, the Board will continue to issue decisions that are responsive, unbiased, transparent and evidence-based. Data management processes will be strengthened so that regulatory compliance remains robust. The Board will continue to refrain from commenting on energy policy issues, its role being one of implementing policy choices affirmed by legislation and regulations. A new system of Administrative Monetary Penalties will be implemented as an additional tool for enforcing regulatory compliance. Enforcement measures taken against companies will be made available to the public on the NEB website to enhance transparency. We will continue posting documents related to Board-initiated safety and environmental compliance actions to our website.

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. In response, the Board will continue to implement its People Strategy as well as other human resources initiatives that promote strong management practices, strategic recruitment, in-vestment in people and effective work-life balance principles.

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 challenges. In response, the Board will continue to strengthen internal/administrative functions such as integrated planning, risk management and program evaluation. The Board will also update its Business Continuity Framework so that the delivery of essential services is not compromised by external events.

Planning Summary

Financial Resources (Planned Spending - $ millions)
Total Budgetary Expenditures
(Main Estimates)
2013-14
Planned
Spending
2013-14
Planned
Spending
2014-15
Planned
Spending
2015-16
62.4 66.9 65.5 63.3


Human Resources (Full-Time Equivalents - FTE)
2013-14 2014-15 2015-16
427.6 423.6 423.6


Planning Summary Table for Strategic Outcomes ($ millions)
Strategic Outcome Program Actual Spending
2010-11
Actual Spending
2011-12
Forecast Spending
2012-13[5]
Planned Spending Alignment to Government of Canada Outcomes[6]
2013-14 2014-15 2015-16
Pipelines, power lines, energy development and energy trade are regulated in the Canadian public interest. Energy Regulation 26.9 34.9 37.0 38.6 38.9 36.7 Strong Economic Growth
Energy Information 6.3 8.3 8.8 8.1 7.8 7.8 Strong Economic Growth
Sub-Total 33.2 43.2 45.8 46.7 46.7 44.5  


Planning Summary Table for Internal Services ($ millions)
Program Actual
Spending
2010-11
Actual
Spending
2011-12
Forecast
Spending
2012-13[7]
Planned Spending
2013-14 2014-15 2015-16
Internal Services 25.6 21.2 22.6 20.2 18.8 18.8
Sub-Total 25.6 21.2 22.6 20.2 18.8 18.8


Planning Summary Table Total ($ millions)
Strategic Outcome(s) Program(s),
and Internal Services
Actual
Spending
2010-11
Actual
Spending
2011-12
Forecast
Spending
2012-13[8]
Planned Spending
2013-14 2014-15 2015-16
Total 58.8 58.8 68.4 66.9 65.5 63.3


Expenditure Profile

The NEB is funded through parliamentary appropriations. The Government of Canada recovers approximately 90 percent of the appropriation from the regulated industry. The revenues are deposited directly into the Consolidated Revenue Fund. This process is regulated by the Cost Recovery Regulations under the NEB Act.

The NEB spending trend shows expenditure increases until 2012-13, after which a gradual decrease in planned spending is expected.

In 2011-12, spending increased over the previous two fiscal years as the NEB realized the full impact of the transfer in jurisdiction of the NGTL system and finished staffing the additional FTE positions. As well, spending increased due to new funds received for the Arctic Review initiative.

Additional funds were received in 2012-13 to enhance NEB safety and security programs. Funding was also provided to cover special allowances. In the absence of a current collective agreement these funds are provided in year and therefore were not part of the forecasted spending for 2012-13.

Moving into 2013-14 and 2014-15, planned spending is anticipated to decrease. The overall reduction in allocation and spending is due partly to the collective bargaining process. The NEB did not receive up-front funding to continue special allowances when the collective agreement expired in October 2011. Special allowance funding is calculated and provided as part of the in-year process of Supplementary Estimates and therefore is not included in the forecast for planned spending. Any future provisions for special allowances are subject to a collective bargaining process. However, this overall decrease in planned spending will be partially offset in 2013-14 and 2014-15 by increased costs for the Participant Funding Program, which will receive an additional $0.75 million and $2.2 million respectively due to a projected high hearing workload.

Departmental Spending Trend

Departmental Spending Trend
Text description of this graph

Spending Trend

This line graph shows the National Energy Board’s seven-year spending trend. It includes actual spending for the fiscal years 2009-10 to 2011-12, planned spending for the year 2012-13 and planned spending for the years 2013-14 to 2015-16.

Actual Spending by period is as follows:

  • 2009-10: $56.2 million
  • 2010-11: $58.8 million
  • 2011-12: $64.4 million

Forecast Spending by period is as follows:

  • 2012-13: $68.4 million

Planned Spending by period is as follows:

  • 2013-14: $66.9 million
  • 2014-15: $65.5 million
  • 2015-16: $63.3 million

Estimates by Vote

For information on our organizational appropriations, please see the 2013–14 Main Estimates publication.

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