Interprovincial and international oil and gas pipelines and additions to existing pipeline systems under federal jurisdiction require the Board's approval before they may be built. Public oral or written hearings are held for pipeline construction applications exceeding 40 kilometres in length or any other applications at the discretion of the Board. Pipelines which lie completely within the borders of a single province are regulated by that province's regulatory body.
In determining whether a pipeline project should proceed, the Board reviews, among other things, its economic, technical and financial feasibility, and the environmental and socio-economic impact of the project.
To ensure that engineering, safety and environmental requirements are met, the Board audits and inspects the construction and operation of pipelines. Since February 1987, Board inspectors have also been responsible for enforcing Part II of the Canada Labour Code, applying to the occupational safety and health of pipeline workers in the field.
The NEB shares responsibility with the Transportation Safety Board for incident investigation. The NEB investigates pipeline incidents to determine whether its regulations have been followed and if those regulations may need to be changed. The Transportation Safety Board investigates the cause and contributing factors. The NEB also monitors excavation activity by third parties near pipelines to ensure compliance with existing regulations.
Most electric power lines and facilities fall within provincial jurisdiction. The Board authorizes the construction and operation of international power lines and designated interprovincial lines under federal jurisdiction.
In determining the suitability of an application, the Board reviews, among other things, the technical feasibility of the project, its effect on adjacent provinces and its environmental impact.
Almost all provinces bordering the U.S. have interconnections with neighbouring American utilities.
The Board's environmental responsibility includes ensuring environmental protection during the planning, construction, operation and abandonment of energy projects within its jurisdiction. When making its decisions, the Board may take into consideration environmental concerns related to air, land and water pollution, disturbance of renewable and non-renewable resources, the integrity of natural habitats, the disruption of land and resource use, and the protection of landowner rights.
Companies preparing an application to the Board are usually required to anticipate the environmental issues and concerns that the proposed project could create and to discuss these with all levels of government, public interest groups, and affected landowners.
If the project application is approved, the Board ensures that the company continues to protect the environment and public health and safety by auditing and inspecting the company's construction activities, the operation of its system, and the company's routine maintenance and monitoring procedures.
Under the NEB Act, the Board is required to consider matters of public interest as they may be affected by the granting of an application. The Board has assumed a mandate for environmental protection as a component of the public interest. The Board therefore ensures that appropriate environmental assessments are conducted for proposed facility projects under its jurisdiction, according to standards prescribed by the legislation. For more information refer to the FAQs on Environmental Assessments.
Safety is a matter of primary public interest and has been included in the Board's mandate since 1959. The Board is responsible for ensuring companies comply with regulations concerning the safety of employees, the public, and the environment, as they may be affected by the design, construction, operation, maintenance and abandonment of a pipeline. For 35 years the Board has worked with CSA International to develop safety regulations and technical standards currently in effect for federally regulated pipelines.
In addition, through an agreement between the Board and Human Resources and Social Development Canada, Board staff have been designated as Safety Officers for the occupational health and safety of pipeline company field staff. These health and safety duties are usually combined with other construction site and facility inspections.
On 6 July 2012, the National Energy Board Act (NEB Act) was amended to include time limits for the processing of applications made under sections 52, 58 and 58.16. Under the NEB Act, the Chair of the NEB must set this time limit. The time limit must be no longer than 15 months after the day on which an applicant has, in the Board’s opinion, provided a complete application. The Board must complete its assessment and make its recommendation or decision within this time limit. On 6 July 2012, the Chair determined the time limits for the processing of applications filed under section 52, 58, and 58.16 of the NEB Act. These can be found in the document Letter - Jobs, Growth and Long-term Prosperity Act - Establishment of time limits for section 52, 58, and 58.16 applications [Filing A42827]. Although other types of applications may not be subject to these time limits, the NEB will continue to work efficiently in the processing of all applications. The NEB remains committed to processing applications in accordance with its Service Standards.
The Board regulates pipeline tolls and tariffs under its jurisdiction to ensure they are just and reasonable and that there is no undue discrimination in tariffs or services.
Pipelines under the Board's jurisdiction are divided into two groups: Group 1 consists of 10 major oil and gas pipeline companies and Group 2 encompasses the remaining smaller pipeline companies. This grouping tailors the degree of financial regulation to the extent of the public interest in a company's operations. To reduce the regulatory burden on smaller companies, the Board regulates three of the Group 1 pipelines and all of the Group 2 companies on a complaint basis. Under the complaint basis of regulation, the parties are encouraged to work out any problems with the pipeline company. If this is unsuccessful, a complaint may be filed with the Board.
When establishing tolls for the Group 1 companies, the Board traditionally examines their capital and operating costs to ensure that companies shipping oil or natural gas are protected from unjustified high transportation costs. Tolls set by the Board cover the cost of service plus a fair and reasonable return to investors.
Major toll applications normally warrant a public hearing. However, the requirement for lengthy and costly oral public hearings has been declining, in large part due to the advent of negotiated multi-year settlements. In 1994, the Board published its Guidelines for Negotiated Settlements of Traffic, Tolls and Tariffs. The guidelines are intended to facilitate a negotiated settlement process which will allow pipeline companies, producers, shippers, consumers, governments and other interested parties to resolve toll and tariff matters through consensus building and negotiation, without resorting to a lengthy hearing process. Any negotiated settlements must still be approved by the Board. Some of the largest pipeline companies regulated by the Board have reached multi-year incentive toll settlements with their stakeholders.
In 1994/95 the Board conducted a generic multi-pipeline cost of capital proceeding. Capital structure and rate of return on common equity for some Group 1 companies are set based upon an adjustment mechanism established in this proceeding. This mechanism has also helped to reduce the requirement for hearings.
A pipeline company's tariff contains the conditions under which transportation service is provided. The tariff includes conditions on accepting new shippers, on allocating capacity to shippers and on determining which position a prospective shipper will occupy on the waiting list for service.
The Board requires that pipeline companies operate according to the principle of "open access". This means that all parties must have access to transportation on a non-discriminatory basis. In addition, tolls for services provided under similar circumstances and conditions with respect to all traffic of the same description, carried over the same route, must be the same for all customers. The Board conducts compliance audits as part of its monitoring responsibility.
The Board regulates the following specific forms of energy:
The export and import of natural gas is authorized by the Board under either long-term licences or short-term orders. Following a public hearing, long-term licences may be issued for up to 25 years subject to Governor in Council approval. Short-term orders for a maximum period of two years can be issued without a public hearing and do not require Governor in Council approval.
Natural gas exports occur at several major export points along the Canada/United States border. The volume exported depends upon market supply and demand as well as available pipeline capacity. Canada's imports of natural gas are relatively small, compared to its exports, and are used primarily to serve markets in southern Ontario and British Columbia.
Propane, butanes and ethane are by-products extracted from natural gas processing and refinery processing of crude oil. Board approval is required for export, usually in the form of a short-term export order. Ethylene is a compound produced by cracking ethane and does not require approval for export purposes. All four products are classified as natural gas.
The Board monitors the supply and demand of natural gas, including the performance under existing export authorizations. This ensures that the quantity of gas exported does not exceed the surplus remaining after Canadian requirements have been met.
The Board authorizes oil exports by issuing short-term orders for periods less than one year for light crude oil and less than two years for heavy crude oil. These exports occur under short-term orders due to characteristics of the oil market. The Board does not regulate oil imports.
Canada produces enough oil to meet its own needs and has been a net exporter of oil for some time; however, oil is imported to supply both the Atlantic Provinces and Quebec. Most Canadian oil exports are to the American Midwest and Montana markets. Smaller volumes are shipped to the U.S. West and Gulf coasts.
The Board monitors the supply and demand of oil, as it does with natural gas, to ensure quantities exported do not exceed the surplus remaining after Canadian requirements have been met.
Normally, permits are issued to export electricity without a public hearing unless the Governor in Council, after recommendation by the Board, designates a particular application for licensing or certification. The Board does not regulate electricity imports.
Issues which the Board considers when making its decisions may include the effect of exports on adjacent provinces, the environment and fair market access for Canadians.
The amount of electricity exported is influenced by several factors. First, the amount exported cannot exceed the limits set by the Board. Secondly, the weather plays an important role because approximately 70 per cent of exports are generated by hydro-electric facilities; low water levels in Canada reduce the amount of power generated and the amount available for export. Strong domestic demand can also reduce quantities available for export. Finally, the economics of export transactions influence the amount sold.
The Board regulates Frontier lands and offshore areas not covered by provincial/federal management agreements.
Responsibilities include the regulation of oil and gas exploration, development and production, enhancing worker safety, and protecting the environment. Other Frontier activities include the calculation of discovered and undiscovered hydrocarbon resources, the development of emergency environmental contingency plans, and fostering research programs which support and complement the Board's regulatory responsibilities.
The Board provides technical and administrative assistance to the Northern Pipeline Agency which, under the Northern Pipeline Act, has primary responsibility for overseeing the planning and construction of the Canadian portion of the proposed Alaska Natural Gas Transportation System by Foothills Pipe Lines Ltd.
When required, the Board conducts studies or research into energy matters to meet its regulatory responsibilities. The Board may also hold inquiries on its own initiative, when appropriate. With this knowledge and expertise, the Board reports to and advises the Minister of Natural Resources on energy issues.