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Section III: Supplementary Information

3.1 Organizational Information

The Board is structured into five business units reflecting major areas of responsibility: Applications, Operations, Commodities, Planning, Policy and Coordination and Integrated Solutions. In addition, the Executive Office includes the specialized services of Legal Services and Regulatory Services.

Applications

The Applications Business Unit is responsible for processing and assessing most regulatory applications submitted under the NEB Act, including facilities and tolls and tariffs applications and construction and operation of international and interprovincial electric power lines. The Applications Business Unit is also responsible for other matters such as the financial surveillance and financial audits of companies under the Board’s jurisdiction and for addressing landowner concerns.

Operations

The Operations Business Unit is accountable for safety and environmental matters pertaining to facilities under the NEB Act, the COGO Act and the CPR Act. It conducts safety and environmental inspections and audits; investigates incidents; monitors emergency response procedures; regulates the exploration, development and production of hydrocarbon resources in non-accord Frontier lands; and develops related safety and environment regulations and guidelines.

Commodities

The Commodities Business Unit is responsible for energy industry and marketplace surveillance, including the outlook for the demand and supply of energy commodities in Canada, updating guidelines and developing regulations relating to energy exports as prescribed by Part VI of the NEB Act. It is also responsible for assessing and processing applications for oil, natural gas and electricity exports.

Planning, Policy and Coordination

The Planning, Policy and Coordination Business Unit is responsible for developing the NEB’s long-term regulatory framework and regulatory tools and for organization-wide planning and coordination. This includes providing communication, engagement, appropriate dispute resolution and technical excellence (through its professional leader and knowledge network services) services to the Board.

Integrated Solutions

Integrated Solutions is responsible for developing, implementing and supporting strategies and solutions to enhance business outcomes. This includes Board-wide computer systems and services, materiel and facilities management, contracting, library services, corporate records management, financial management, human resource management, translation and document design and production.

Executive Office

The Executive Office is responsible for the Board’s overall capability and readiness to meet strategic and operational requirements, including providing legal advice for regulatory and management purposes,3 administering hearings and providing regulatory support.

Figure 11: NEB Organizational Structure

missing image file

3.2 Performance Measures Summary


Strategic Outcome

Goals

Measures

Further information

Safety, security, environmental protection and economic benefits through regulation of pipelines, power lines, trade and energy development within NEB jurisdiction.

Goal 1 – NEB- regulated facilities and activities are safe and secure and are perceived to be so.

Number of fatalities: 0 pipeline related; 1 electricity facility related

Number of hydrocarbon pipeline ruptures per year: 0

Number of pipeline incidents per year: 55

COGO Act disabling
injuries: 2

COGO Act hazardous occurrences: 25

Number and significance of security infractions: 0

Section 2.3.1

Goal 2 – NEB-regulated facilities are built and operated in a manner that protects the environment and respects the rights of those affected.

Percent of environmental conditions that achieved their desired end results: 100% in calendar year 2006

Number of major liquid hydrocarbon releases into the environment: 1 major release in calendar year 2006

Section 2.3.2

Goal 3 – Canadians benefit from efficient infrastructure and markets.

Evidence that Canadian energy and transportation markets are working well

Evidence that advice and information products benefit Canadians: Web visits doubled; media hits up 131%

Evidence that the Board’s regulatory processes are efficient and effective: Service standards for non-hearing s.58 applications met

Section 2.3.3

Goal 4 – The NEB fulfills its mandate with the benefit of effective public engagement.

Stakeholders are involved in the Board’s public processes: stakeholder satisfaction approximately 86%

Section 2.3.4

Goal 5 – The NEB delivers quality outcomes through innovative leadership and effective processes.

Employee satisfaction: 84% (National EOS 2005)

Per capita cost of regulation: $1.32 for calendar year 2006

Section 2.3.5


3.3 Financial Information

Table 7: Comparison of Planned Spending and Full-time Equivalents


Departmental Planned versus Actual Spending ($ millions)


2004-05
Actual


2005-06
Actual

2006-2007

Main
Estimates

Planned
Spending

Total
Authorities

Actual Spending

Energy Regulation and Advice

38.1

39.8

37.9

37.9

43.4

44.5

Total

38.1

39.8

37.9

37.9

43.4

44.5

Less: Non-respendable revenue

42.8

38.6

39.4

39.4

39.4

35.6

Plus: Cost of services received without charge

5.6

5.6

5.8

5.8

5.8

6.3

Total Departmental Spending

0.9

6.8

4.3

4.3

9.8

15.2



Full Time Equivalents

299.6

300

305.1

305.26


Table 8: Voted and Statutory Items


Financial Requirements by Authority ($ millions)

Vote or
Statutory Item

Truncated Vote 
or Statutory Wording

2006-2007

Main 
Estimates

Planned 
Spending

Total 
Authorities

Actual 
Spending

30

Program Expenditures

33.0

33.0

38.5

39.6

(S)

Contributions to employee benefit plans

4.9

4.9

4.9

4.9

 

Total

37.9

37.9

43.4

44.5


Table 9: Net Cost of Department


Net Cost of Department 2006-2007

($ millions)

Total Actual Spending

44.5

Plus: Services Received without Charge

 

Accommodation provided by Public Works and Government Services Canada (PWGSC)

3.9

Contributions covering employers’ share of employees’ insurance premiums and expenditures paid by TBS (excluding revolving funds)

2.3

Worker’s compensation coverage, cost recovery audit costs and miscellaneous costs provided by other departments

0.1

Sub-total 

6.3

Less: Non-respendable Revenue

35.6

2006-2007 Net Cost of Department

15.2


Table 10: Sources of Non-Respendable Revenue


Non-Respendable Revenue ($ millions)

Actual
2004-05

Actual
2005-06

2006-2007

Main
Estimates

Planned
Revenue

Total
Authorities

Actual

Energy Regulation and Advice

42.8

38.6

39.4

39.4

39.4

35.6

Total Non-respendable Revenue

42.8

38.6

39.4

39.4

39.4

39.4


The NEB is an independent regulatory agency, established in 1959 under the NEB Act. The NEB Act authorizes the Board to charge those companies it regulates costs attributable to the NEB’s operations in carrying out its related responsibilities.

3.4 External Fees and Service Standards

NEB Service Standards identify targets for key aspects of service delivery. The Service Standards and annual results can be found on the NEB website at http://www.neb-one.gc.ca under “Who we are & our governance”.

Table 11: Energy Regulation and Advice – National Energy Board Act


Fee Activity

Description

Amount

Energy Regulation and Advice

The NEB regulates in the public interest those areas of the oil, gas, non-hydrocarbon and electricity industries relating to:

  • construction and operation of pipelines;
  • construction and operation of international and designated interprovincial power lines;
  • transportation, tolls and tariffs of pipelines;
  • exports of oil, gas and electricity and imports of oil and gas; and
  • oil and gas activities on Frontier lands not subject to a federal/provincial accord. 

Fee Type

Regulatory (R)

Fee Setting Authority

The NEB External Charging is in accordance with sub-section 24.1 (1) of the NEB Act. As of 1 January 1991 under the NEB Cost Recovery Regulations, the Board recovers the cost of its operations from the majority of the companies that it regulates. The Board has the delegated authority to determine what costs will be excluded from program expenditures for cost recovery purposes.

Date Last Modified

NEB Cost Recovery Regulations last amended on 6 November 2002

2006-2007 Forecast Revenue
($ millions)

Regulatory

39.4

2006-2007 Actual Revenue ($ millions)

Regulatory

35.6

Estimated Full Cost
($ millions)

Regulatory
a) NEB Costs = 40.2
b) Other Departments Costs = 5.7

45.9

Forecast Revenue
($ millions)

Sub-Total 2007 - 08
2008 - 09
2009 – 10

Total

39.6
39.6
38.3

117.5

Estimated Full Cost
($ millions)

Sub-Total 2007 - 08
2008 - 09
2009 – 10

Total

39.7
39.7
39.7

119.1


Table 11.1: Service Standards Report


Service Standards

Service Standard Results
2006-2007*

Reasons for Decision

  • 80% of Reasons for Decision completed within 12 weeks following a public hearing

Reasons for Decision

Five hearings: 80% completed in 12 weeks

Export/import authorizations

  • Oil and/or petroleum orders processed: 100% in 2 working days
  • NGL orders processed: 100% in
    2 working days
  • Gas import and export orders processed: 100% in 2 working days

Electricity export permits: 80% in 75 days

Export/import authorizations

  • Oil and/or petroleum orders processed: 111 received; 100% completed in 2 days
  • NGL orders processed: 115 received; 100% completed in 2 days
  • Gas import and export orders processed: 164 received; 100% completed in 2 days

Electricity export permits: 5 received; 40% completed in 75 days

Landowner Complaints

  • Respond with initial course of action: 100% within 10 calendar days
  • Resolve the complaint: 80% within 60 calendar days

Landowner Complaints

  • Respond with initial course of action: 31 files; 100% response within 10 calendar days
  • Resolve the complaint: 24 files; 90% of files were closed within 60 calendar days

Onshore pipeline regulation (OPR) audits

  • 80% of draft OPR reports sent to the audited company within 8 weeks of completing field work
  • 80% of Final OPR reports sent to the audited company within 8 weeks of receiving the company’s comments on the draft report

Onshore pipeline regulation audits

  • 5 received; 80% sent to the audited company within 8 weeks
  • 5 received; 60% sent to the audited company within 8 weeks

Financial audits

  • 80% of draft financial reports sent to the audited company within 8 weeks of completing field work
  • 80% of final financial audit reports sent to company within 3 weeks of receiving the audited company’s comments on draft financial report

Financial audits

3 audits conducted; both service standards met (100% of reports sent within specified period)

Non-hearing Section 58 application cycle times

  • Category A (complexity of issues considered minor): 80% of decisions released in 40 calendar days
  • Category B (complexity of issues considered moderate): 80% of decisions released in 90 calendar days
  • Category C (complexity of issues considered major): 80% of decisions released in 120 calendar days

Non-hearing Section 58 application cycle times

  • Category A: 6 received: 83% in 40 days
  • Category B: 15 received: 87% in 90 days
  • Category C: 0 received
* The Board met all of its service standards except two. The Board’s target of sending the final OPR audit report to the company was not met due to a process transition that occurred throughout the year. This transition will result in improved service, including a reduced turnaround time. Therefore, the service standard will be changed. The Board’s target of completing 80 percent of electricity export within 75 days was not achieved due to the nature of the exports. The service standard was reviewed and revised and will be reported on in the future and support continual improvement efforts.

Consultation

When the NEB Cost Recovery Liaison Committee (CRLC) was established in July 1990, the composition of the committee ensured that there was representation from each of the industry’s major associations and companies. The CRLC was established for ongoing consultation and communication regarding cost recovery methodology, regulations and new initiatives affecting cost recovery processes. In addition, the NEB tables and discusses its financial statements and anticipated expenditures with the CRLC. The NEB’s performance results are presented to the CRLC at regularly scheduled meetings.

Dispute Management

The NEB has a Dispute Management Process in accordance with Treasury Board External Charging Policy, to ensure that disputes and issues raised by stakeholders related to external charging are addressed and resolved fairly and efficiently. In this process, there are three hierarchical levels to resolve a dispute. The first level of resolution rests with the Chair of the CRLC. If the dispute is unresolved at the first level, the issue will be passed on to the second level where a committee is formed. Where the first level and the second level fail to result in a resolution, the matter will be referred to the Chairman of the Board. Each level is given 90 days from the date of receipt of notification or escalation to resolve the dispute.

The disputes and issues may include but will not be limited to:

  • failure to meet the agreed standard of services or products;
  • negotiated charges perceived to be unreasonable;
  • issues regarding specifications and descriptions of the required services or products;
  • cancellation of the negotiated services or products; or
  • failure to meet deadlines.

Table 12: Energy Regulation and Advice – Canada Oil and Gas Operations Act


Fee Activity

Description

Amount

Energy Regulation and Advice – Canada Oil and Gas Operations Act

Under the COGO Act, the NEB regulates oil and gas activities on Frontier lands not subject to a federal/provincial accord.

Fee Type

Regulatory (R)

Fee Setting Authority

Canada Oil and Gas Operations Act

Date Last Modified

1992

2006-2007 Forecast Revenue

Regulatory

900

2006-2007 Actual Revenue

Regulatory

750

Estimated Full Cost

Regulatory
a) NEB Costs = 4,300,000
b) Other Departments Costs = 600,000

4,900,000

Forecast Revenue

Sub-Total 2007 - 08
2008 - 09
2009 – 10

Total

900
900
900

2,700

Estimated Full Cost

Sub-Total 2007 - 08
2008 - 09
2009 – 10

Total

4,300,000
4,300,000
4,300,000

12,900,000


Table 12.1: Service Standard Report


Service Standards

Service Standard Results
2006-2007

COGO Act applications

Well drilling applications

  • Decisions rendered within 21 calendar days of receiving a complete application

Geological and geophysical applications

  • Decisions rendered within 30 calendar days of receiving a complete application

COGO Act applications

Well drilling applications

  • 26 received: 100% of decisions rendered within 21 calendar days

Geological and geophysical applications

  • 20 received: 100% of decisions rendered within 30 days

CPR Act applications

  • Decision for Significant Discovery
  • Decision for Commercial Discovery Applications on Frontier lands

80% of decisions for both rendered within 90 calendar days

CPR Act applications

  • 3 received: 100% of decisions rendered within 90 calendar days
  • 0 received

Consultation

The NEB’s COGO Act and CPR Act service standards are reviewed with stakeholders on an opportunity basis at meetings with companies, organizations (such as the Canadian Association of Petroleum Producers), and at other venues (such as the Annual Oil and Gas Forum).

Table 13: Service Standard for Access to Information Act


Fee Activity

Description

Amount

Access to Information Act

Fees charged for the processing of access requests filed under the Access to Information Act (ATIA)

Fee Type

Other products and services (O)

Fee Setting Authority

Access to Information Act 

Date Last Modified

1992

2006-2007 Forecast Revenue

Other Products and Services

100

2006-2007 Actual Revenue

Other Products and Services

25

Estimated Full Cost

Other products and Services
a) NEB Costs = 32,805
b) Other Departments Costs = 0

32,805

Forecast Revenue

Sub-Total 2007 - 08
2008 - 09
2009 – 10

Total

100
100
100

300

Estimated Full Cost

Sub-Total 2007 - 08
2008 - 09
2009 – 10

Total

35,000
35,000
35,000

105,000


Table 13.1: Service Standard Report


Service Standards

Service Standard Results

Responding to Access to Information requests

  • Response provided within 30 days following receipt of request; the response time may be extended pursuant to section 9 of the ATIA. Notice of extension to be sent within 30 days after receipt of request.

Responding to Access to Information requests

  • 2 received: 100% of requests completed in 30 days or notice of extension sent within 30 days; 1 request was received then later abandoned by the party who made the request

3.5 Department’s Regulatory Plan


Regulatory Instrument

Expected Results and Progress

National Energy Board Damage Prevention Regulations

Less prescriptive, goal oriented regulations for NEB regulated facilities to more effectively address safety in the proximity of pipelines. Will replace the National Energy Board Pipeline Crossings Regulations, Parts I and II. These regulations are being reviewed by the Department of Justice in collaboration with the Board during this fiscal year.

National Energy Board Onshore Pipeline Regulations (OPR-99) and National Energy Board Processing Plant Regulations

Revise regulations to include concept of decommissioning. Ministerial approval has been received to proceed to publication in Canada Gazette Part I.

National Energy Board Cost Recovery Regulations

Amend regulations to: respond to a request from the electricity industry and to align billing with the NEB’s fiscal year. These regulations are being reviewed by the Department of Justice during this fiscal year.

Canada Oil and Gas Diving Regulations; Newfoundland Offshore Area Petroleum Diving Regulations; and Nova Scotia Offshore Area Petroleum Diving Regulations

Less prescriptive, goal-oriented regulations for activities under the Canada Oil and Gas Operations Act and under the Accord implementation acts*. Updated and harmonized regulations for diving activities in support of oil and gas programs in Frontier lands. These regulations were being reviewed by Department of Justice during this fiscal year.

Canada Oil and Gas Drilling and Production Regulations; Newfoundland Offshore Area Oil and Gas Drilling and Production Regulations; and Nova Scotia Offshore Area Oil and Gas Drilling and Production Regulations

A goal-oriented regulation resulting from the amalgamation and updating of the current Drilling Regulations and Production & Conservation Regulations. Three mirror versions are being created for the three Frontier and offshore jurisdictions.

Draft Drilling and Production Regulations were released to stakeholders in early April 2005 for a comment period ending 17 August 2007. Anticipated completion of the draft regulations and beginning of the government approval processes is fall 2008. Target timing for promulgation is Q3 2008. Draft guidance notes for the regulations are in preparation with the same target completion date.

Regulations made under the Canada Oil and Gas Operations Act:

  • Production and Conservation Regulations
  • Certificate of Fitness Regulations
  • Geophysical Operations Regulations
  • Installations Regulations

Incorporation of recommendations made by the Standing Joint Committee for the Scrutiny of Regulations.

*Accord implementation acts refers to the Canada-Newfoundland Atlantic Accord Implementation Act and the Canada-Nova Scotia Offshore Petroleum Accord Implementation Act.

3.6 Financial Statements

Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended 31 March 2007 and all information contained in these statements rests with departmental management.  These financial statements have been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.   

Management is responsible for the integrity and objectivity of the information in these financial statements.  Some of the information in the financial statements is based on management’s best estimates and judgment and gives due consideration to materiality.  To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the department’s financial transactions.  Financial information submitted to the Public Accounts of Canada and included in the department’s Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds.  Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff; by organizational arrangements that provide appropriate divisions of responsibility; and, by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the department. 

The financial statements of the department have not been audited for the 31 March 2007 fiscal year. However, the National Energy Board also produces financial statements on a calendar year basis that are audited by the Office of the Auditor General.


National Energy Board
Statement of Operations (Unaudited)
For the Year Ended March 31
(in thousands of dollars)

 

2007

2006

REVENUES

   

Regulatory fees

35,630

38,617

Miscellaneous revenue

5

4

 

35,635

38,621

EXPENSES

   

Salaries and employee benefits

36,344

32,363

Accommodations

4,658

4,538

Professional and special services

4,518

4,462

Travel

2,800

2,341

Amortization

821

634

Repairs and maintenance

515

219

Acquisition machinery and equipment

387

 

Supplies

375

448

Communications

310

203

Other

109

216

Total operating expenses

50,837

45,424

Net cost of operations

(15,202)

(6,803)

The accompanying notes form an integral part of these financial statements.


 


National Energy Board
Statement of Financial Position (Unaudited)
At March 31
(in thousands of dollars)

 

2007

2006

ASSETS

   

Financial assets

   

Accounts receivable and advances (Note 4)

9,651

8,634


Total financial assets

9,651

8,634

Non-financial assets

   

Prepaid expenses

210

353

Tangible capital assets (Note 5)

2,294

2,508


Total non-financial assets

2,504

2,861

TOTAL

12,155

11,495

     

LIABILITIES AND EQUITY OF CANADA

   

Liabilities

   

Accounts payable and accrued liabilities

4,599

2,560

Vacation pay and compensatory leave

1,390

1,390

Employee severance benefits (Note 6)

5,611

5,191

Total liabilities

11,600

9,141

Equity of Canada

555

2,355

TOTAL

12,155

11,495

Contingent liabilities (Note 7)

Contractual obligations (Note 8)

The accompanying notes form an integral part of these financial statements.



National Energy Board
Statement of Equity of Canada (Unaudited)
For the Year Ended March 31
(in thousands of dollars)

 

2007

2006

Equity of Canada, beginning of year

2,355

3,210

Net cost of operations

(15,202)

(6,803)

Current year appropriations used (Note 3)

43,973

39,785

Revenue not available for spending

(35,635)

(38,621)

Change in net position in the Consolidated Revenue Fund (Note 3)

(1,164)

(1,185)

Services received without charge from other government departments (Note 9)

6,228

5,969

Equity of Canada, end of year

555

2,355

The accompanying notes form an integral part of these financial statements.



National Energy Board
Statement of Cash Flow (Unaudited)
For the Year Ended March 31
(in thousands of dollars)

 

2007

2006

Operating activities

   

Cash received from:

   

Regulatory and other fees

34,588

41,011

Cash paid for:

   

Salaries and employee benefits

(31,273)

(30,370)

Professional services

(4,530)

(4,714)

Travel

(2,788)

(2,491)

Machinery & equipment

(430)

-

Rentals

(740)

(615)

Supplies

(375)

(448)

Other

(309)

(425)

Repairs & maintenance

(515)

(405)

Communications

(310)

(353)

Cash provided by operating activities

(6,682)

1,190

Capital investment activities

   

Acquisitions of tangible capital assets

(492)

(1,170)

Financing activities

   

Net cash provided by Government of Canada

(7,174)

20

The accompanying notes form an integral part of these financial statements.


Notes to Financial Statements

1. Authority and Objectives

The National Energy Board (NEB) is an independent regulatory agency, established in 1959 under the National Energy Board Act and is designated as a department and named under Schedule I.1 of the Financial Administration Act, reporting to Parliament through the Minister of Natural Resources.

The NEB regulates the following specific aspects of the energy industry:

  • the construction and operation of international and interprovincial pipelines;
  • the construction and operation of international and designated interprovincial power lines;
  • traffic, tolls and tariffs of international and interprovincial pipelines;
  • exports of oil, gas and electricity and imports of gas and oil; and
  • oil and gas activities on Frontier lands not subject to a federal/provincial accord.

Other responsibilities of the NEB include providing advice to the Minister of Natural Resources Canada on the development and use of energy resources.

NEB’s corporate purpose is to promote safety, environmental protection and economic efficiency in the Canadian public interest within the mandate set by Parliament in the regulation of pipelines, energy development and trade. This principle guides the NEB in carrying out and interpreting its regulatory responsibilities. The companies that are regulated by the Board create wealth for Canadians through the transport of oil, natural gas and natural gas liquids, and through the export of hydrocarbons and electricity. As a regulatory agency, the Board’s role is to help create a framework which allows these economic activities to occur when they are in the public interest.

The NEB operates in a manner similar to a civil court. For major applications and inquiries, the Board holds public hearings at which applicants and interested parties have full rights of participation.

The NEB has the authority to charge those companies it regulates, in accordance with sub-section 24.1(1) of the NEB Act, the total costs attributable to the NEB’s operations in carrying out its related responsibilities.

Under the National Energy Board Cost Recovery Regulations (the Regulations) approved by the Treasury Board, the National Energy Board recovers from the companies it regulates the cost of its operations, effective 1 January 1991. It has the delegated authority to determine what costs will be excluded from program expenditures for cost recovery purposes.

The NEB operates within the Consolidated Revenue Fund (CRF). The CRF is administered by the Receiver General for Canada. All cash received by the NEB is deposited to the CRF and all cash disbursements made by the NEB are paid from the CRF.

2. Summary of Significant Accounting Policies

The financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

a) Parliamentary appropriations – the Department is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the department do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.

b) Net Cash Provided by Government – The department operates within the CRF, which is administered by the Receiver General for Canada.  All cash received by the department is deposited to the CRF and all cash disbursements made by the department are paid from the CRF.  The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.

c) Change in net position in the CRF is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non-respendable revenue recorded by the department.  It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

d) Revenues: 

  • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
  • Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.

e) Expenses – Expenses are recorded on the accrual basis:

  • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
  • Services provided without charge by other government departments for accommodation, the employer’s contribution to the health and dental insurance plans and legal services are recorded as operating expenses at their estimated cost.

f) Employee future benefits

i) Pension benefits:  Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada.  The department’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan.  Current legislation does not require the department to make contributions for any actuarial deficiencies of the Plan.

ii) Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment.  These benefits are accrued as employees render the services necessary to earn them.  The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole. 

g) Accounts receivables are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain. 

h) Contingent liabilities – Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur.  To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded.  If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

i) Foreign currency transactions – Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect on 31 March 2007. 

j) Tangible capital assets – All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost.  The department does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:


Asset class

Amortization period

Machinery and equipment (Furniture)

10 years

Machinery and equipment (Audio visual equipment)

5 years

Informatics hardware (PCs and accessories)

3 years

Informatics hardware (Computer servers & accessories)

5 years

Informatics software (Commercial software)

2 years

Informatics software (In-house developed software)

5 years

Vehicles

5 years

Leasehold improvements

Lesser of the remaining term of the lease or useful life of the improvement

Assets under construction/development

Once in service, in accordance with asset type

Leased tangible capital assets

In accordance with asset type if ownership is likely to transfer to the department; otherwise, over the lease term


k) Measurement uncertainty – The preparation of these financial statements in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, the liability for employee severance benefits and the useful life of tangible capital assets.  Actual results could significantly differ from those estimated.  Management’s estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known. 

3. Parliamentary Appropriations

The Department receives most of its funding through annual Parliamentary appropriations.  Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years.  Accordingly, the Department has different net results of operations for the year on a government funding basis than on an accrual accounting basis.  The differences are reconciled in the following tables: 


(a) Reconciliation of net cost of operations to current year appropriations used:

(in thousands of dollars)

2007

2006

Net cost of operations

15,202

6,803

Adjustments for items affecting net cost of operations but not affecting appropriations:

   

Add (Less):

   

Services provided without charge

(6,228)

(5,969)

Amortization of tangible capital assets

(822)

(634)

Revenue not available for spending

35,635

38,621

(Loss) gain on disposal and write-down of tangible capital assets

-

-

Vacation pay and compensatory leave

 

(45)

Employee Severance Benefits

(420)

(146)

Other

(528)

29

 

42,839

38,659

Adjustments for items not affecting net cost of operations but affecting appropriations

   

Add (Less): Acquisitions of tangible capital assets

492

387


Prepaid expenses

642

739

Current year appropriations used

43,973

39,785



(b) Appropriations provided and used

(in thousands of dollars)

2007

2006

Vote 30 – Operating expenditures

38,157

33,341

Vote 30a – Operating expenditures

-

-

Transfer from TB Vote 15

102

-

Governor General’s special warrants

-

2,242

Statutory amounts

4,890

4,639

Less:

   

Lapsed appropriations: Operating

-

(437)

Operating overexpenditure

824

-

Current year appropriations used

43,973

39,785



c) Reconciliation of net cash provided by Government to current year appropriations used

(in thousands of dollars)

2007

2006

Net cash provided by Government

7,174

(20)

Revenue not available for spending

35,635

38,621

Change in net position in the Consolidated Revenue Fund

   

Variation in accounts receivable and advances

(1,017)

2,353

Variation in accounts payable and accrued liabilities

2,460

(955)

Other adjustments

(279)

(213)

Subtotal

1,164

1,185

Current year appropriations used

43,973

39,785


4. Accounts Receivable and Advances

The following table presents details of accounts receivable and advances:


(in thousands of dollars)

2007

2006

Receivables from other Federal Government departments and agencies

261

371

Receivables from external parties

12,311

11,144

Employee advances

(5)

35

 

12,567

11,550

Less: allowance for doubtful accounts on external receivables

(2,916)

(2,916)

Total

9,651

8,634


5. Tangible Capital Assets


(in thousands of dollars)

Cost

Accumulated amortization

   

Capital asset class

Opening balance

Acquis.

Disposals and write-offs

Closing balance

Opening balance

Amort.

Disposals and write-offs

Closing balance

2007
Net book value

2006
Net book value

Informatics (Hardware)

1,950

40

-

1,990

1,449

197

-

1,646

344

501

Informatics Software

1,975

-

-

1,975

710

409

-

1,119

856

1,265

Machinery and equipment

132

-

-

132

123

6

-

129

3

9

Other mach. & equip (incl. furniture)

114

66

-

180

31

11

-

42

138

83

Vehicles

25

-

-

25

15

5

-

20

5

10

Leasehold improvements

513

386

-

899

150

194

-

344

555

363

Assets under construction/ development

278

115

-

393

-

-

-

-

278

662

Total

4,987

607

-

5,594

2,478

822

-

3,300

2,294

1,972

Amortization expense for the year ended March 31, 2007 is $821,332 (2006 - $633,932).


6. Employee Benefits 

a) Pension benefits: The department’s employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada.  Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings.  The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.

Both the employees and the department contribute to the cost of the Plan.  The 2006-07 expense amounts to $3,477,641 ($3,432,879 in 2005-06), which represents approximately 2.6 times the contributions by employees.

The department’s responsibility with regard to the Plan is limited to its contributions.  Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.

b) Severance benefits:  The department provides severance benefits to its employees based on eligibility, years of service and final salary.  These severance benefits are not pre-funded.  Benefits will be paid from future appropriations.  Information about the severance benefits, measured as at March 31, is as follows:


(in thousands of dollars)

2007

2006

Accrued benefit obligation, beginning of year

 

5,045

Expense for the year

 

1,299

Benefits paid during the year

 

(1,153)

Accrued benefit obligation, end of year

 

5,191


7. Contingent Liabilities

Claims and Litigation

Claims have been made against the department in the normal course of operations.  Legal proceedings for claims totalling approximately $60,000 ($35,000 in 2006) were still pending at 31 March 2007.  Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur.  The likelihood of these claims being realized cannot be determined so no amount has been accrued in the financial statements.

8. Contractual Obligations

The nature of the department’s activities can result in some large multi-year contracts and obligations whereby the department will be obligated to make future payments when the services/goods are received.  Significant contractual obligations that can be reasonably estimated are summarized as follows:


(in thousands of dollars)

2008

2009

2010

2011 and thereafter

Total

Vendor contracts

279

160

9

-

448

Operating leases

2,629

107

-

-

2,736

Total

2,908

267

267

-

3,184


9. Related-party transactions

The department is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations.  The department enters into transactions with these entities in the normal course of business and on normal trade terms.  Also, during the year, the department received services which were obtained without charge from other Government departments as presented in part (a).

a) Services provided without charge:

During the year the department received without charge from other departments, accommodation and the employer’s contribution to the health and dental insurance plans.  These services without charge have been recognized in the department’s Statement of Operations as follows:


(in thousands of dollars)

2007

2006

Accommodation

3,917

3,924

Employer’s contribution to the health / dental insurance plans

2,311

2,045

Total

6,228

5,969


The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge.  The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included as an expense in the department’s Statement of Operations. 

b) Payables and receivables outstanding at year-end with related parties:


(in thousands of dollars)

2007

2006

Accounts receivable with other government departments and agencies

261

371

Accounts payable to other government departments and agencies

-

43


c) Administration of programs on behalf of other government departments

The NEB administers the Northern Gas Project Secretariat (NGPS) and Environmental Studies Research Funds (ESRF). NGPS expenses are part of the NEB’s appropriation whereas ESRF expenses are not.

The concept of the Northern Gas Project Secretariat was first unveiled in the Cooperation Plan, a document produced by the Northern Pipeline Environmental Impact Assessment and Regulatory Chairs’ Committee in June 2002.

This Plan describes the framework that the authorities with environmental impact assessment and regulatory mandates, called the Agencies, will follow to implement coordinated environmental impact assessment and regulatory processes for a proposed major northern gas pipeline project and associated developments. It outlines methods of cooperation between the Agencies that will avoid duplication of effort and provides clarity and certainty of process for the public, companies and other stakeholders.

The environmental review process commenced with the filing of the Preliminary Information Package in June 2003. The regulatory processes commenced with the filing of the five applications for the construction and operation of the Mackenzie Gas Project in October 2004.

The Northern Gas Project Secretariat office was officially opened in December 2003. With offices in Yellowknife and Inuvik, staff at the Project Secretariat will help northerners and interested public effectively participate in the environmental review and regulatory processes.

According to the Treasury Board submission approved on 1 December 2003, the operating costs of NGPS incurred by NEB are recoverable under the National Energy Board Act because the Secretariat functions are classified as part of the application process of the Act.

The NEB administers the Environmental Studies Research Funds. These funds are provided by INAC and NRCan. None of the NEB’s appropriation is included in these funds. Any unused balances in the ESRF accounts are transferred to the partner departments at year end. ESRF expenses are reflected in the financial statements of INAC and NRCan.

10. Comparative information

Comparative figures have been reclassified to conform to the current year’s presentation.

3.7 Regulatory Reporting

The following table presents a summary of NEB Public Hearings from 1 April 2006 to 31 March 2007.


Oral Hearings

Results

Outcomes

Mackenzie Gas Pipeline (MGP)
GH-1-2004

Application seeking approval to construct and operate a natural gas pipeline and related facilities through the Mackenzie Valley.

Ongoing process.

40 hearing days held between 1 April 2006 and 31 March 2007.

TMX – Anchor Loop

OH-1-2006

Application seeking approval to build and operate a 158 kilometre pipeline loop and other facilities to increase the capacity of the Trans Mountain’s TMX Pipelines.

Oral hearing held in Calgary on 8-9-10 August 2006.

Reasons for Decision (RFD) issued on 26 October 2006.

Conditional approval to build and operate a 158 km pipeline loop and other facilities.

Emera Brunswick Pipeline Company Ltd.

GH-1-2006

Application seeking approval to build and operate a 145 kilometre, 762 millimetre diameter pipeline from the CanaportTM Liquefied Natural Gas Facility at Mispec Point in Saint John, New Brunswick to a point on the international border near St. Stephen, New Brunswick.

Oral hearing held in Saint John, NB between 6-21 November 2006.

Decision pending.

TransCanada PipeLines Limited (TransCanada) and TransCanada Keystone GP Ltd. (Keystone)

MH-1-2006

Application seeking approval for the transfer of certain pipeline facilities from TransCanada to Keystone.

RFD issued on 9 February 2006.

Sale and purchase of the Facilities from TransCanada to Keystone is approved.

Enbridge Pipelines (Westspur) Inc. (Enbridge)

OH-2-2007

Preliminary Information Package filed on 7 September 2006 for the proposed Alida to Cromer Capacity Expansion (ACCE) Project.

Hearing scheduled to be held on 11 April 2007.

Ongoing process.

TransCanada Keystone PipeLine GP Limited (Keystone)

OH-1-2007

Application to construct and operate the Canadian portion of the Keystone Project – a proposed crude oil line that would run from Alberta to markets in Illinois.

Hearing scheduled to begin in Calgary on 4 June 2007.

Ongoing process.

TransCanada PipeLines Limited (TransCanada)

RH-1-2006

Application to change the tariff on the Mainline natural gas pipeline

Hearing held in Toronto (18-22 September) and in Calgary (27-29 September).

RFD issued on 23 November 2006.

TransCanada is directed to file with the Board, two years after natural gas starts to flow under an FT-SN contract, a report on the use of FT-SN and SNB services.

EnCana Corporation

GH-2-2006

Applications to develop the Deep Panuke Offshore Natural Gas Project.

Hearing held on 27 & 29 November 2006 and 5-9 March 2007.

Ongoing process.

TransCanada PipeLines Limited (TransCanada)

RH-1-2007

Application seeking approval of a new receipt point at Gros Cacouna (QC) for the receipt of regasified liquefied natural gas (LNG). Affirmation is also being requested for the tolling methodology that will apply to service from that point.

Hearing to be held in Québec City on 16 April 2007.

Ongoing process.


3.8 Parliamentary Committee Recommendations

There were no parliamentary committee reports issued concerning the NEB during the reporting period.

3.9 Evaluations and Reviews

The following evaluations and reviews conducted under the auspices of the NEB Audit and Evaluation Committee were completed in 2006-2007:

  • Audit of Accounting and Control of Goods and Services Expenditures
  • Review of the Quality Management System (QMS) Project
  • Knowledge Management Initiative Evaluation Framework
  • Preliminary Assessment of Quality Management System for Compliance with ISO 9001:2000 QMS Standard
  • Internal Audit of Quality Management System for Compliance with ISO 9001:2000 QMS Standard
  • Readiness Review of Quality Management System for Compliance with ISO 9001:2000 QMS Standard

The above reports are available upon request and following management review and response they will be posted on the NEB website for improved access.

3.10 Procurement and Contracting

The procurement and contracting functions are the responsibility of the Finance, Facilities and Procurement Services Team within the Integrated Solutions Business Unit. In 2006-2007, there were some 223 procurement instruments issued for a total contract value of $3.6 million. Of these, 22 contracts/local purchase orders were issued under the auspices of the Procurement strategy on Aboriginal Business program for a total value of $610,610.00.

3.11 Travel Policies

The NEB became a separate employer under the Public Service Staff Relations Act, effective 31 December 1992 under Order in Council (OIC) (P.C. 1992-2595). Through the OIC, personnel management, as defined by the Financial Administration Act, was delegated to the Chairman of the NEB. For unionized employees, the NEB has agreed to adopt the policies of the National Joint Council, as amended from time to time, as part of the conditions of employment.