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Home > Speeches and Presentations > Speeches and Presentations 2010 > Developing and Disclosing an Effective Governance Manual: National Energy Board

Developing and Disclosing an Effective Governance Manual: National Energy Board

Presented by
Sheila Leggett
Vice-Chair
National Energy Board

6^th Annual Crown Corporate Governance
Ottawa, Ontario

21 January 2010

Thank you for the opportunity to share with you our experience in developing a Governance Manual for our organization. Building a Governance Manual has been a long journey which has strengthened us as an organization and therefore has enhanced our ability to serve the public interest.

Discussions about public sector governance at the NEB began in 2001 with a dialogue about developing an NEB Governance Model. More recently, in 2008, we engaged Elizabeth Watson of Watson Advisers Inc. to help us develop and populate the framework for our Governance Manual. Spending the time to develop the framework for the Manual and to populate it has documented the governance practices which have been developing over the past many years. Secondly, the process of documentation has identified areas where our practices were either vague or non existent. Using our framework, we have been able to fill these gaps.

Who are we and What do we do?

First, let me describe our organization to you. The NEB is an independent federal regulatory tribunal that was established in 1959.

We report to Parliament through the Minister of Natural Resources.

We currently have about 370 staff, seven permanent Members and five temporary Members. Permanent Members are appointed for seven year terms. Temporary Members are not required by the legislation to reside in Calgary and are not engaged on a full time basis with the Board. One of our temporary Members has been appointed for a specific file, while our other temporary Members are involved in a broad range of activities associated with our mandate. Currently, a typical term for our Temporary Members is three years.

Role of the NEB

For 50 years, we at the NEB and the many people who interact with us, have been ensuring Canadian energy is regulated, at the federal level, in a manner which is respective of rights, responsive to markets and protective of Canadians and the environment. Examples of our regulatory deliverables include environmental assessment under the Canadian Environmental Assessment Act and the NEB Act as well Decisions with reasons on applications filed with our Board. If approval is granted, a certificate of public convenience and necessity is issued which contains certificate conditions, including mandatory follow-up and monitoring actions. It is the NEB's responsibility to ensure that all certificate conditions are fulfilled. We also approve toll methodologies as well as tolls and tariffs. We are responsible for the full life cycle of the facilities which we regulate and therefore conduct field inspections during construction and operation. We also conduct safety, environment and financial audits.

NEB Areas of Responsibility

NEB Pipeline Responsibilities

This slide shows the pipelines that are regulated by the Board - approximately 70,000 km of pipeline in Canada.

Natural gas pipelines account for about 2/3 of this total, and oil pipelines make up the other 1/3. In 2008, it was estimated that these pipelines shipped over $127 billion worth of natural gas, crude oil, petroleum products and natural gas liquids, at an estimated transportation cost of $4.4 billion.

Strategic Plan 2009-2012

We deliver our mandate through our Strategic Plan. The Strategic Plan sets the long term vision for the NEB and is the cornerstone of the NEB's planning framework. Refining and improving our strategic planning process has been linked with our evolution towards best practices in public sector governance. We have found that having a good governance framework in place has provided clarity in the roles and responsibilities of our members, our executives and our staff. This, in turn, has defined each of our collective roles in developing our Strategic Plan and associated Internal Action Plans.

Members are responsible for the one page Strategic Plan. In our annual strategic planning cycle, Members dialogue with staff and external stakeholders to understand our current operating context and to decide on our strategic drivers and issues. From there, Members decide what, if any, adjustments should be made to the one page plan. As this document is developed, Members collectively have discussions with staff to ensure that we are all of a common understanding prior to staff moving forward with work plans and budgeting.

Public Interest: The public interest is inclusive of all Canadians and refers to a balance of economic, environmental and social interests that changes as society's values and preferences evolve over time. As a regulator, the Board weighs the relevant impacts on these interests when making its decisions.

Why Boards like the NEB are unique

From a governance perspective, the NEB is a hybrid organization. The role of Members is primarily to make decisions in the public interest on applications and regulatory matters. Unlike corporate Boards, Members are not responsible for the financial or people management of the organization.

Purpose of Manual

The Governance Manual outlines how the Board carries out its responsibilities in non-adjudicative areas. It sets out the shared governance responsibility between the Board and the Chair/CEO. Because of the Board's values and commitment to high performance in the public interest, we believe that it is important to share our Governance Manual externally. We are very close to realizing our goal of posting our Manual on our external website.

Principles of Governance adopted by the NEB

NEB Organizational Chart

This chart illustrates how we are organized. As opposed to being hierarchical, we view the organization as being an organic molecule.

Governance Model for the National Energy Board

Over the years, we have developed a governance model that describes how we interact as Board Members with the staff. We use this model to guide us in our Strategic Planning process and in all of our interactions. The Board, composed of our Members, is responsible for the content of the Strategic Plan, including Purpose, Vision, Values and Goals. You will see on this diagram that there is overlap between the Members and the staff with respect to Goals. Staff's focus in our governance model is the "how", while Members define the "what".

The Process

NEB Oversight Functions - Part I

In preparation for writing the Manual, Liz provided us with this table and asked us to complete it. This generated much discussion throughout many parts of the organization as we tabulated the accountabilities. This step, alone, was hugely useful.

NEB Oversight Functions - Part II

In completing this table, we defined and identified sub-bullets for the accountability in terms of whether the role of the 4 groups were to approve, be informed, be consulted or to support the accountability for the function.

NEB Member and Temporary Member Skills Matrix Template

Given the Board's commitment to continuous improvement and to performing at a high level, the Governance Manual sets out a template for recording the skills and experience profile for all Members and Temporary Members. This profile can be used to identify professional development opportunities as well as to provide the Government with recommendations of key attributes required when considering filling vacancies. Our Governance Committee is responsible for ensuring that this Matrix is reviewed and updated annually.

Table of Contents - Members

There are thirteen chapters in the Manual. While I won't review all of the chapters, I have grouped some of the topic areas on the next few slides. One of the first chapters sets out our operational framework and discusses our structure and framework. Within the section on our structure, the roles and responsibilities are described for the Board, Chair/CEO, Vice-Chair, Members and Temporary Members, Board Committees, the Chief Operating Officer, the Secretary and Staff. The framework section describes how the Board delivers on its five governance principles previously described- Culture, Vision and Values; Roles and Relationships; Decision-making; Risk Management and Accountability.

The Board's terms of reference sets out its regulatory and organizational responsibilities, its Committees and its accountability.

There are chapters describing the Chair/CEO, Vice-Chair and Member and Temporary Member positions. Within these chapters, the roles, responsibilities, accountabilities and other key aspects of the positions are discussed. There is also a discussion and reference to the conflict of interest provisions which Members must follow.

Table of Contents - Committees

The Board currently has two Committees. Each Committee has its own Terms of Reference which is reviewed annually. The Manual includes the Terms of Reference for each of these Committees. There are also references to these Committees throughout the Manual including in the Board Terms of Reference as well as in some of the chapters which describe positions.

Table of Contents - Evaluation

The Board is committed to Board and Committee evaluation designed to provide Members and Temporary Members with an annual opportunity to examine how the Board and its Committees are performing their non-adjudicative functions and identify opportunities for improvement. The goal of these evaluations and suggested areas of assessment are presented in the Manual.

Table of Contents - Strategic Planning

As I mentioned earlier on in this presentation, we find that our governance model and our Strategic Plan are inextricably linked. Therefore, there is a chapter in the manual which outlines our strategic planning process and also discusses roles, responsibilities and timelines.

Lessons Learned

A key lesson for us has been the time commitment and effort that it has taken us to build our Manual. It is not a project which you can hand over to an external consultant and then take delivery of it three months later. Liz Watson lead us through a process which took about a year and provided us with the framework and much of the text for the Manual. Subsequently, we had a change in our governance structure which required that we edit portions of the manual. That process again led to much internal discussion which has further clarified and improved the Manual.

Lessons learned (Cont'd)

Through this process, we have recognized that our governance practices are continuing to evolve. Reviewing the manual on a regular basis has helped us recognize and document our changes. For example, we had to significantly edit the document last year when the use of Temporary Members became more common. The process of updating the Manual helped us ensure that we had incorporated best governance practices into our changed structure.

The document has been prepared to be electronically friendly and easy to update. All documents mentioned in the text can be accessed by clicking on the hyper-link for the document. With the document management system in place at the Board, this ensures that the most current version of all documents are always available.

In order to assure that the document is an effective communication tool, we have written it using principles of plain language writing.

Next Steps

Conclusions

Contact Us

• www.neb-one.gc.ca
• Email: info@neb-one.gc.ca
• Calgary phone number: 403-292-4800
• Toll free: 1-800-899-1265

 

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Date Modified:

2011-10-28