ARCHIVED - National Energy Board - 2015-2016 - Report on Plans and Priorities - Section I: Organizational Expenditure Overview

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Section I: Organizational Expenditure Overview

Organizational Profile

Minister:The Honourable Greg Rickford, 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 (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 areas[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), 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, 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

Priority - Take Action on Safety
Priority Type[2] Strategic Outcome(s)
[and/or] Program(s)
Take Action on Safety[3] Ongoing Energy Regulation
Description

Why is this a priority?

It is important that the NEB clearly demonstrates to Canadians how we hold companies accountable and what companies are accountable for regarding safety[4]. Actions in support of this priority will increase Canadians’ confidence that the NEB is effectively fulfilling its mandate.

This next phase in the NEB’s commitment to safety is to advance safety culture in companies and in the industry as a whole, in concert with effectively implemented safety management systems.

The NEB will demonstrate a stronger link between targeted safety and compliance actions and the safety performance of companies. The NEB will increase focus on trending, root cause and systemic issues, show how this analysis leads to broader, more proactive compliance and enforcement actions, and ultimately to better outcomes in the regulated industry.

What are the plans for meeting this priority?

  • Develop and implement an enhanced external Safety Culture framework and collaborate with other regulatory agencies on this initiative
  • Plan and hold technical sessions to publicly discuss safety
  • Improve quality of regulatory data
  • Use enhanced data analysis to inform improvement of regulatory programs for safety and protection of the environment
  • Transparently communicate how the NEB prevents incidents and fosters the development of effective industry safety cultures

Priority - Engaging with Canadians
Priority Type[5] Strategic Outcome(s)
[and/or] Program(s)
Engaging with Canadians New Energy Regulation

Energy Information
Description

Why is this a priority?

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 will go 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 broad and bold engagement 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. We have to listen to what Canadians have to say to us, and be open to making changes based on those conversations.

Initiatives are already underway, including a National Outreach Initiative involving meetings across Canada, which will enable us to make connections and begin a dialogue that will then shape our ongoing approach to public engagement. Canadians will not like or dislike energy development or facilities any more or less because of the relationship we have with them, but they will understand who we are, what we do, and what we cannot do.

What are the plans for meeting this priority?

  • Establish an engagement framework for non-application purposes.
  • Develop and implement a framework for the use of public feedback in NEB work
  • Establish points of presence (regional teams) in key locations
  • Deliver on the NEB’s National Outreach Initiative
  • Continue to provide Canadians with accurate and relevant energy information
  • Implement protocols and new tools to share information (i.e. the NEB’s Discussion Forum)

Priority - Lead Regulatory Excellence
Priority Type[6] Strategic Outcome(s)
[and/or] Program(s)
Lead Regulatory Excellence New Energy Regulation

Energy Information

Internal Services
Description

Why is this a priority?

Demonstrating regulatory leadership will improve public confidence in our ability to fulfill our mandate, as well as facilitate stronger coordination and cooperation with our territorial, provincial, federal and international counterparts. These actions will also enhance our credibility as a regulator with stakeholders in Canada and around the world.

We are a strong regulator. We are taking steps to be clear about what regulatory excellence means for us as an organization. We will demonstrate, quantitatively as well as qualitatively, how we know our programs are focused on the right things and achieving the right results. We will take a more comprehensive review and evaluation of our processes and management systems, seeking to continually improve our capacity as a regulator as well as show that what we expect of the companies we regulate is what we also expect of ourselves.

What are the plans for meeting this priority?

  • Develop and implement a framework for regulatory excellence
  • Define regulatory excellence for the NEB, including criteria and assessment parameters
  • Collaborate with other regulators to define regulatory excellence
  • Assess the NEB’s effectiveness as both a regulator and an organization and implement improvements
  • Define criteria and measures to evaluate and implement an internal culture of safety
  • Support internal culture of safety and environmental protection with strong governance and decision-making

Risk Analysis

The NEB takes risk into account in its integrated business planning and decision-making processes, which is codified in the NEB’s Integrated Risk Management Policy and process. Risks with the potential to affect the achievement of organizational objectives are identified, analyzed, evaluated, monitored and reviewed at the strategic and operational levels to inform decision-making, priority setting, resource allocation and corporate reporting.


Key Risks
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 could result in a serious injury, fatality(ies) or significant environmental damage Implement additional controls and monitor Energy Regulation Program
Due to increased national and international interest in pipelines and the use of NEB processes to voice concerns on Canada’s energy future, there is a risk of inaccurate or incomplete information about the NEB or NEB-regulated facilities communicated to Canadians by third parties Implement additional controls and monitor Energy Regulation Program

Energy Information Program
Due to several factors including increasing public interest in pipelines, there is a risk of a physical security incident at a hearing involving NEB staff, Board Members or the public Implement additional controls and monitor Energy Regulation Program
Due to several drivers such as the fact that NEB activities are not always visible to the public and the lack of an NEB presence across Canada, there is a risk that the NEB will fail to engage effectively with Canadians Implement additional controls and monitor Energy Regulation Program
Due to aging business applications, business systems are no longer aligned with business needs and cannot support business requirements Implement additional controls and monitor Energy Regulation Program

Internal Services

In 2014, the NEB regulated approximately 73 000 kilometres of interprovincial and international pipelines operated by 101 companies, and approximately 1400 kilometres of international power lines across Canada operated by 31 companies. These pipelines shipped approximately $162 billion worth of crude oil, petroleum products, natural gas liquids and natural gas to Canadian and export customers at an estimated transportation cost of $7 billion. NEB-regulated international power lines transmitted approximately $3.7 billion of electricity into and out of Canada.

The NEB’s responsibilities are not only shaped by emerging energy trends, but also by the proactive consideration of safety, environmental, societal and economic trends that may influence the NEB’s ability to carry out its responsibilities in the Canadian public interest.

Growth in North American oil supply has already displaced a significant portion of the North American imports from overseas. This has driven interest in accessing overseas markets for Canadian crude oil and increasing use of rail. Similar dynamics have occurred in the past few years in North American natural gas markets, and led to over 20 long-term LNG export licence applications being received by the NEB since 2010. While earlier LNG export applications all specified B.C. coastal locations as the export point, recent applications are proposing export points in Nova Scotia and Quebec. By the start of 2015, surplus global supply conditions have led to a collapse of world oil prices, which should eventually slow supply growth and rebalance the market.

The NEB continues to work in a changing environment and to experience increased workload in all areas. Parliamentarians and members of the public continuously show an increased interest in the energy industry, the safety of pipelines and environmental impacts of pipeline failures, as well as the role of the public in influencing regulatory and political decisions regarding the development of Canada’s energy industry. The NEB recognizes the need to communicate effectively with Canadians about its regulatory processes (e.g. applications and incidents).

Planned Expenditures

Budgetary Financial Resources (dollars)
2015-16
Main Estimates
2015-16
Planned Spending
2016-17
Planned Spending
2017-18
Planned Spending
76,820,510 77,550,511 71,597,521 59,149,504

Human Resources
(Full-Time Equivalents [FTEs])
2015-16 2016-17 2017-18
471.2 444.4 398.5

Budgetary Planning Summary for Strategic Outcome(s) and Program(s) (dollars)
Strategic Outcome(s), Program(s) and Internal Services 2012-13
Expenditures
2013-14
Expenditures
2014-15
Forecast Spending
2015-16
Main
Estimates
2015-16
Planned
Spending
2016-17
Planned
Spending
2017-18
Planned
Spending
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 44,125,872 47,970,746 51,724,157 49,588,459 52,632,974 48,926,812 39,263,190
1.2 Energy Information Program 5,974,560 6,156,305 6,637,716 5,982,273 5,620,814 5,225,464 4,595,393
Subtotal 50,100,432 54,127,051 58,361,873 55,570,732 58,253,788 54,152,276 43,858,583
Internal Services Subtotal 19,445,209 27,555,630 31,947,470 21,249,778 19,296,723 17,445,245 15,290,921
Total 69,545,641 81,682,681 90,309,343 76,820,510 77,550,511 71,597,521 59,149,504

The NEB is funded through parliamentary appropriations. The Government of Canada recovers approximately 90 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.

Additional temporary funds were received in 2012-13 to enhance NEB safety and security programs as well as public awareness. These funds will cease at the end of 2016-17. Temporary funding for two fiscal years was also received in 2014-15 to support a high-level of applications and hearings workload which was re-profiled over fiscal years 2015-16 to 2017-18 with the funding expiring in 2017-18.

In 2015-16, the decrease in planned spending in comparison to 2014-15 forecast spending is largely due to a $8.3 million amount for moving to the Centre 10 location as well as one-time severance payouts stemming from the provisions of a new collective agreement both of which occurred in 2014-15. The 2015-16 planned spending includes $6.6 million for eligible paylist expenses as well as re-profiling of funds from 2014-15 due to lower than anticipated hearing workload including associated grants and contributions funds pertaining to the participant funding program.

The decrease in planned spending for 2016-17 and 2017-18 is due to a shift in application submissions. 2017-18 planned spending is lower than 2016-17 due to the temporary funds to enhance safety and security programs and public awareness expiring.

Alignment of Spending With the Whole-of-Government Framework

Alignment of 2015-16 Planned Spending With the Whole-of-Government Framework (dollars)
Strategic Outcome Program Spending Area Government of Canada Outcome 2015-16
Planned
Spending
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 Economic affairs Strong economic growth 52,632,974
  1.2 Energy Information Economic affairs Strong economic growth 5,620,814
Total Spending by Spending Area (dollars)
Spending Area Total Planned Spending
Economic Affairs 58,253,788
Social Affairs 0
International Affairs 0
Government Affairs 0

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 2012-13 and 2013-14, forecast spending for the year 2014-15 and planned spending for the years 2015-16 to 2017-18.

Actual Spending by period is as follows:

  • 2012-13: $69.5 million
  • 2013-14: $81.7 million

Forecast Spending by period is as follows:

  • 2014-15: $90.3 million

Planned Spending by period is as follows:

  • 2015-16: $77.6 million
  • 2016-17: $71.6 million
  • 2017-18: $59.1 million

The increase in actual spending from 2012-13 to 2014-15 is due to an increase in funding related to enhancing safety and security programs and public awareness. The increase in actual and forecast spending between 2012-13 and 2014-15 is largely attributed to the move to Centre 10 location in downtown Calgary. Actual and forecast spending increases between 2013-14 and 2014-15 are attributable to one-time severance payouts stemming from the provisions of a new collective agreement. The decrease in planned spending from 2014-15 to 2015-16 is largely attributed to move costs and collective agreement costs not impacting 2015-16 offset to a small degree by re-profiling funds from 2014-15 due to lower than anticipated hearing workload. The decrease in planned spending for 2016-17 and 2017-18 is due to a shift in anticipated application submissions. 2017-18 planned spending is lower than 2012-13 to 2016-17 spending due to the temporary funds for enhanced NEB safety and security programs as well as public awareness expiring. These funds were the NEB’s sole sunset program.

Estimates by Vote

For information on the National Energy Board’s organizational appropriations, consult the 2015-16 Main Estimates on the Treasury Board of Canada Secretariat website.

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