National Energy Board – 2015–2016 Departmental Performance Report - Section I: Organizational Overview

Section I: Organizational Overview

Organizational Profile

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

Institutional Head:
C. Peter Watson, P.Eng. FCAE

Ministerial Portfolio:
Natural Resources

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

Year of Incorporation / Commencement:
1959

Headquarters:
Calgary, Alberta

Regional Offices:
Montréal, Québec
Vancouver, British Columbia
Yellowknife, Northwest Territories

Organizational Context

Raison d’être

The National Energy Board (NEB or 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, the Canada Oil and Gas Operations Act (COGOA), the Canada Petroleum Resources Act (CPRA), and the Northwest Territories’ Oil and Gas Operations Act (OGOA) and Petroleum Resources Act (PRA).

The NEB conducts environmental assessments (EA) 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 Ac, 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
      • 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
    • Internal Services

Note that the NEB is working on a Departmental Results Framework based on the new Treasury Board Policy on Results. This will replace the program structure above, align resources with priorities and results and the NEB will be able to show closer alignment between its key responsibilities and expected performance.

Operating Environment and Risk Analysis

In 2015–16, the NEB regulated approximately 73,000 kilometers of interprovincial and international pipelines in Canada, along with approximately 1,400 kilometers of international power lines.

In 2015, NEB-regulated pipelines shipped approximately $99.7 billion worth of crude oil, petroleum products, natural gas liquids, and natural gas to Canadian and export customers at an estimated transportation cost of $7.3 billion. NEB-regulated international power lines transmitted approximately $3.4 billion of electricity into and out of Canada.

The operating environment for the NEB’s context continued to evolve in 2015–16 due to unprecedented uncertainty in energy markets. Among the many factors contributing to this uncertainty were rapidly changing energy production technologies, and geopolitical events that affect global energy supplies and prices. Canada exported record volumes of crude oil in 2015, with the vast majority going to the U.S., but the value of the exports declined due to low prices.

Public interest in the interactions between energy infrastructure, safety and environmental protection remained high throughout 2015–16. Energy systems and the dialogue around them are becoming increasingly complex. Public and private stakeholders want – and increasingly expect – to be part of that dialogue. They also want accessible and transparent energy information.

2015–16 also saw a shift in the policy environment including the announcement of new climate policies and agreements, as well as Government of Canada commitments to improve environmental assessment and regulatory processes, and restore public trust. The Government implemented interim principles in January 2016 for projects currently undergoing environmental assessments and announced a review to modernize the NEB.

Within this evolving context the NEB has re-aligned its resources and structure to focus and clearly define the outcomes and performance that Canadians should expect as the Board delivers its regulatory mandate. The Board is placing a strong focus on results, which will enable it to more meaningfully track and report on the progress of commitments, assess the effectiveness of its work, and ensure that resources continue to be aligned with priorities. The NEB is also supporting and informing the NEB modernization review, and is committed to helping to renew public trust in our processes and activities.

Key Risks

Risk
Risk Risk Response Strategy Link to the
Organization’s
Program(s)

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

  • Monitored compliance through an increased number of risk-informed verification activities (378 in 2015–16, an increase from 335 in 2014–15).
  • Audited five regulated companies to verify effectiveness of their management systems.
  • Inspection Officers applied enforcement tools for all issues of non-compliance.
  • Communicated safety culture indicators to regulated companies.
  • Promoted effective emergency management response to regional authorities.

Risk identified in the 2015–16 RPP
Strategies reduced risk exposure

1.1 Energy Regulation

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

  • Improved web-based information on pipeline safety: Interactive Pipeline Incident Map, Event Reporting System, Inspection Reports.
  • Produced accurate, reliable energy information products and made them available to external stakeholders and the public.
  • Increased regional engagement with stakeholders through regional offices.

Risk identified in the 2015–16 RPP
Strategies reduced risk exposure

1.1 Energy Regulation

1.2 Energy Information

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

  • Developed and implemented hearing-specific risk management plans.
  • Monitored hearings daily.
  • Conducted pre-hearing recognizance trips.
  • Conducted regular integrated security briefings.
  • Increased engagement with communities impacted by NEB regulated facilities.

Risk identified in the 2015–16 RPP
Strategies reduced risk exposure

1.1 Energy Regulation
Due to several drivers such as the fact that NEB activities are not always visible to the public and the lack of NEB presence across Canada, there is a risk that the NEB will fail to engage effectively with Canadians
  • Completed National Engagement Tour.
  • Increased regional engagement with stakeholders by establishing regional offices.
  • Developed NEB engagement strategy.

Risk identified in the 2015–16 RPP
Strategies reduced risk exposure

1.1 Energy Regulation

Due to aging business applications, there is a risk that business systems are no longer aligned with business needs and cannot support business requirements

  • Updated system inventory to confirm alignment and ongoing need of systems.
  • Applied portfolio management for systems improvement and development.
  • Adopted and implemented government-wide systems (Phoenix, My GCHR).

Risk identified in the 2015–16 RPP
Strategies reduced risk exposure

1.1 Energy Regulation

Internal Services

Organizational Priorities

Take Action on Safety

Description

The NEB will always focus on safety and environmental protection. It is important to demonstrate to Canadians that the NEB holds companies accountable for safety of workers and the public, process safety, operational safety, facility integrity, security and environmental protection. Going beyond compliance is essential. The NEB is focusing on using data and analysis to drive and shape regulatory programs and influence the dialogue on safety and safety culture. This work also supports the government’s priority for openness and transparency by increasing the information made publicly available both on safety topics and the actions the NEB takes to oversee and regulate safety and environmental protection. Actions in support of this priority help to increase Canadians’ confidence that the NEB is effectively fulfilling its mandate.

Priority TypeFootnote 2

Ongoing

Key Supporting Initiatives
Key Supporting Initiatives
Planned Initiatives Start Date End Date Status Link to the
Organization’s
Program(s)
  • Develop and implement an enhanced external Safety Culture framework and collaborate with other regulatory agencies on this initiative.
June 2014 March 2016 completed 1.1 Energy Regulation
  • Plan and hold technical sessions to publically discuss safety.
March 2015 June 2015 completed
  • Improve quality of regulatory data.
April 2015 March 2017 on track
  • Use enhanced data analysis to inform improvement of regulatory programs for safety and protection of the environment.
April 2015 March 2017 on track
  • Transparently communicate how the NEB prevents incidents and fosters the development of effective industry safety culture.
April 2015 March 2017 on track
Progress Toward the Priority
Progress Toward the Priority

Progress against this priority has been made this past year by working on and implementing planned initiatives. For example:

  • In June 2015, the NEB hosted a Pipeline Safety Forum which brought together over 400 attendees from a variety of backgrounds to exchange information and discuss opportunities for improved safety outcomes. Speakers representing industry, municipalities, landowner associations, academia and first response organizations addressed themes such as safety culture strategies, knowledge sharing, stakeholder concerns, public awareness and other technical solutions to address risks.
  • The NEB increased efficiency of its processes by developing and piloting a new interface for field inspections and incident investigations called Operations Regulatory Compliance Application (ORCA). This form-driven tool can be accessed by NEB staff during field work through a tablet or laptop and it improves the NEB’s ability to collect, track and access accurate information. It moves the NEB away from a paper-based reporting system and streamlines the work of inspectors. It is also notifies and updates companies regarding the status of compliance and enforcement actions.
  • Improving data quality and analysis is an ongoing initiative and the implementation of ORCA puts the NEB on track to achieving this result. Over the next year as ORCA is regularly used, more data will be incorporated and analyzed to inform regulatory program improvements and actions in support of safety and protection of people and the environment.
  • As a result of NEB investigations, observations, data collection on incidents, and the actions of other regulators the NEB issued three safety advisoriesFootnote 3 and two information advisoriesFootnote 4 and two information advisories in 2015–16. Safety and information advisories are issued to NEB-regulated companies, energy associations and provincial regulators to raise awareness about a safety concern and provide recommendations for preventative action.
  • The NEB improved its Emergency Management (EM) Systems by developing EM capacity in the regional offices, increasing the number of EM meetings with key stakeholders and issuing a Board Order requiring regulated companies to publish their emergency procedures manuals by fall 2016.
  • The NEB developed and implemented a best practice with its new Confidential Disclosure (Whistleblower) Process, which formalizes the way it receives, tracks and acts on confidential disclosures on regulated pipelines and facilities.
  • In collaboration with the North American Regulators Working Group on Safety Culture (NARWGSC) a suite of safety culture indicatorsFootnote 5 was published in March 2016.

With modernized IT systems, improved data quality and processes and the capacity and expertise to analyze data, the NEB will continue its conversation on safety culture, measure safety outcomes and demonstrate to the public how the steps the NEB takes can influence industry and regulated companies performance on safety and environmental protection.

Engaging with Canadians

Description

The views of Canadians matter. What the NEB heard during the National Engagement Initiative is that it needs to do a better job of listening to those views as a part of our regulatory lifecycle oversight. Canadians want to be better informed about, and engaged in, the NEB and its processes, plans and decisions about pipeline operations – especially at a regional level. This means the NEB will incorporate public engagement throughout the lifecycle of energy infrastructure regulation, with a particular focus on Indigenous communities, landowners, and municipalities.

Priority TypeFootnote 6

New

Key Supporting Initiatives
Key Supporting Initiatives
Planned Initiatives Start Date End Date Status Link to the
Organization’s
Program(s)
  • Establish an engagement framework for non-application purposes.
July 2015 March 2017 on track 1.1 Energy Regulation

1.2 Energy Information
  • Develop and implement a framework for the use of public feedback in NEB work.
April 2015 March 2017 on track
  • Establish points of presence (regional teams) in key locations.
April 2015 March 2016 completed
  • Deliver on the NEB’s National Outreach Initiative.
January 2015 June 2015 completed
  • Continue to provide Canadians with accurate and relevant energy information.
April 2015 March 2016 completed
  • Implement protocols and new tools to share information.
April 2015 March 2016 completed
Progress Toward the Priority
Progress Toward the Priority

Progress against this priority has been made this past year by implementing and working on planned initiatives. For example:

  • The NEB has moved forward on its strategic engagement program and is nearing completion of an engagement framework that will further the goal of engaging Indigenous Peoples, landowners, regions and communities on what the NEB does to keep energy infrastructure safe. Full implementation of the engagement program is expected in the fall of 2016 when the NEB has fully implemented its new organizational structure.
  • The NEB work with the Land Matters Group (LMG) continued throughout 2015–16. The LMG is a multi-stakeholder advisory group with a focus on issues relating to land associated with pipeline development. Representation includes landowners/landowner groups or associations, government, energy infrastructure industry, land professionals and the academic community.
  • In 2015–16, the NEB moved forward with a data visualization project that will make the energy market information that the NEB produces readily accessible to all Canadians. The project gives Canadians the ability to engage and explore the NEB’s energy information products and data – in a powerful online formFootnote 7 – to help them better understand these complex interactions through our analysis, reports, and statistics.
  • The NEB has significantly expanded its use of Twitter to engage Canadians and plans to expand its social media use to other platforms in the near future. In the six month period from February to August 2016, the NEB has achieved the following results on Twitter: tweeted 537 times, gained 1,100 new followers, and had over 2,300 engagements.
  • On the NEB’s Twitter accounts Canadians can find information on energy statistics, hearing processes, and lifecycle regulatory work. The NEB also livestreamed its TMX recommendation report press conference over Twitter using Periscope. Expanding the NEB’s social media presence and creating innovative and engaging social media content will continue to be a priority of the Communications and Engagement Business Unit in 2017.
  • The NEB released Engaging Canadians on Pipeline Safety to summarize what the NEB’s CEO heard during the National Engagement Tour across Canada from January to June 2015 as well as feedback that was provided by the public through an online discussion forum hosted on the NEB website. The report highlights the common themes and steps the NEB will take to address this feedback.
  • The NEB has started to provide additional pipeline information on its website for the status of conditionsFootnote 8 on approved pipeline projects. Online inspection reports are also being published to the NEB’s Compliance and Enforcement webpage as of November 2015.

Regional Offices

Having established regional offices in Vancouver and Montréal with staff that have technical expertise in engagement and operations field work, the NEB improved its regional presence and ability to readily respond to safety concerns. Adding to a regional presence that already includes Yellowknife, the opening of these new offices leads to improving engagement with stakeholders and relationships with municipalities, communities, landowners, and Indigenous Peoples.

Lead Regulatory Excellence

Description

The NEB is striving for regulatory excellence based on a foundation of the following three attributes that are embedded in all that we do:

  • Stellar Competence – Ensuring that NEB employees have the knowledge, capabilities, and tools required to fully serve the public interest;
  • Empathic Engagement – Ensuring that our engagement with the public is transparent and respectful, through strong links to our engagement strategy; and
  • Utmost Integrity – Improving our ability to serve the public interest by clarifying governance, while ensuring we work within the applicable legal framework.

We are undertaking corporate transformation activities to ensure a “Plan, Do, Check and Adjust” management cycle exists at a systemic level. By planning for, and measuring how well we are achieving results for Canadians, with these attributes in mind, we will be better able to demonstrate to Canadians that we are an effective and responsive regulator.

Priority TypeFootnote 9

New

Key Supporting Initiatives
Key Supporting Initiatives
Planned Initiatives Start Date End Date Status Link to the
Organization’s
Program(s)
  • Define regulatory excellence for the NEB, including criteria and assessment parameters.
  • Develop and implement a framework for regulatory excellence.
  • Collaborate with other regulators to define regulatory excellence.
April 2015 March 2017 on track 1.1 Energy Regulation

1.2 Energy Information

Internal Services
  • Assess the NEB’s effectiveness as both a regulator and an organization and implement improvements.
April 2015 March 2017 on track
  • 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.
July 2016 October 2017 on track
Progress Toward the Priority
Progress Toward the Priority

Progress against this priority has been made this past year by implementing and working on planned initiatives. The NEB has engaged peer regulators, leveraged learnings from international fora and is translating these best practices into its own framework for regulatory excellence.

  • The NEB has taken action by collaborating with several provincial/territorial and federal regulators to define regulatory excellence and share best practices and solutions to common challenges. The NEB contributed to the Alberta Energy Regulator’s research to define regulatory excellence and general framework for implementation. The NEB reviewed the research and discussed its findings with peer regulators. The attributes of stellar competence, utmost integrity and empathic engagement were rigorously tested and were adopted as the foundation of the NEB’s work. Next steps in 2016–17 will include implementation in association with the NEB’s Management System Manual.
  • Internally, the NEB is applying the attributes of regulatory excellence to our regulatory processes and activities. The NEB released a Board Member Operating ModelFootnote 10 in February 2016 in order to clarify NEB governance and processes.
  • The NEB also worked towards a Management System Manual which is a companion piece to the Board Member Operating Model. The attributes of regulatory excellence, along with the Public Service Values, are the foundation of the NEB’s work. The intent is to describe the applicable management system principles and the governance structure used to carry out NEB responsibilities. Implementation is planned in 2016–17.
  • Regulatory excellence is a continual pursuit; the NEB’s contribution to, and participation in, expert fora continues to be an invaluable resource for learning and showcasing best practices.
  • Arctic Offshore Regulators Forum
  • Canadian Common Ground Alliance
  • Community of Federal Regulators
  • International Regulators’ Forum
  • North American Cooperation on Energy Information
  • North American Energy Regulators Trilateral
  • North American Regulators Working Group on Safety Culture
  • Organization of Economic Cooperation and Development (OECD)
  • Pipeline Safety Trust
  • Public Policy Forum
  • Western Regulators’ Forum

Results from participation in these forums:

  • The NEB led the Safety Culture Working Group and indicators project in collaboration with the North American Working Group on Safety Culture.
  • The NEB partnered with the Public Policy Forum, the Alberta Energy Regulator and the Canadian Nuclear Safety Commission to convene three expert meetings to discuss the future of energy regulation in Canada and what it means to achieve regulatory excellence.
  • The NEB joined the OECD’s Network of Economic Regulators as an official member and offers a pan-Canadian voice to the dialogue. The NEB was appointed to the Bureau of this network and contributes to discussions on issues such as regulatory independence, sustainable growth and development, regulatory accountability and transparency, and management best practices.
  • The NEB chaired the North American Regulators Working Group on Safety Culture on a monthly basis and advanced the safety culture discussion regarding regulated entities. The group is also examining safety culture within a regulatory operating environment and the NEB is leading the process to develop a research project protocol to define the attributes of positive regulatory safety culture which support the development of a self-assessment tool.
  • The NEB is an active participant in the Community of Federal Regulators. It frequently hosts activities and, as the regional champion, actively engaged in workshops and speaker series, including the Community of Federal Regulators’ Annual National Workshop. The NEB promoted participation in Communities of Practice and projects related to openness and transparency, regulatory professional development, administrative monetary penalties, web renewal and a regional outreach strategy.

For more information on organizational priorities, see the Minister’s mandate letter.

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