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2010-11
Departmental Performance Report
National Energy Board
The original version was signed by
The Honourable Joe Oliver, P.C., M.P.
Minister of Natural Resources
Gaétan Caron
Chair and CEO National Energy Board
Table of Contents
Section I: Organizational Overview
- Raison d'être
- Responsibilities
- Strategic Outcome(s) and Program Activity Architecture (PAA)
- Organizational Priorities
- Risk Analysis
- Summary of Performance
- Expenditure Profile
- Estimates by Vote
Section II: Analysis of Program Activities by Strategic Outcome
- Strategic Outcome
- Program Activity: Energy Regulation
- Program Activity: Energy Information
- Program Activity: Internal Services
Section III: Supplementary Information
- Financial Highlights
- Financial Highlights Charts and/or Graphs
- Financial Statements
- List of Supplementary Information Tables
Section IV: Other Items of Interest
Chair and CEO's Message
I am pleased to present the National Energy Board’s (NEB or the Board) Departmental Performance Report. The NEB is Canada’s federal energy regulator. Our mandate is to regulate pipelines, energy development and trade in the Canadian public interest. Our goals are public and worker safety, environmental protection and efficient energy infrastructure and markets.
In 2010-11, the Board assessed a number of applications for new pipeline facilities, pipeline tolls and tariffs, pipeline abandonment, and requests to resolve interested party complaints about NEB-regulated companies. Of particular note, the Board issued a decision approving the 1,196-km Mackenzie Gas Pipeline through Canada’s Northwest Territories.
The NEB also regulates oil and gas exploration, development, and production in Canada’s North. Until recently, the NEB’s role as the decision-maker for Arctic offshore drilling was not a focus of public attention. This changed suddenly with the blowout in the Gulf of Mexico. In response, the Board announced that it would review its current Arctic safety and environmental offshore drilling requirements. The review is examining the best available information concerning the hazards and risks associated with offshore drilling activities in the Canadian Arctic, and the safety measures to both prevent and respond to accidents and malfunctions. Our final report, to be published by the end of 2011, will identify the information that the Board will require should applications for offshore drilling in the Canadian Arctic be filed in the future.
While the Canadian pipeline industry continues to be a safe method of transporting energy, the Board has noticed an increase in the number and severity of incidents in recent years. Pipeline safety, including the safety of Canadians who build, operate and live near them, is very important to the Board and to Canadians. To understand the reasons behind the recent trend, the Board analyzed over 100 incidents and shared the results at a workshop to discuss incident-reduction strategies. The lessons learned from these discussions will be integrated into the NEB’s ongoing activities and process enhancements.
Following an amendment to the National Energy Board Act, the NEB established a Participant Funding Program to provide financial assistance to support public engagement in oral hearings for facility applications filed under the Act. Through this program, individuals, landowners, not-for-profit organizations and Aboriginal groups affected by pipeline applications can apply for support to participate in hearing processes.
The past year has been one of great change for the National Energy Board. However, it was also a year in which our commitment to continual learning and accountability has served Canadians well. We look forward to continuing to be active and effective in Canada’s pursuit of a sustainable energy future.
Gaétan Caron
Chair and CEO
Section I: Organizational Overview
Raison d'être
The National Energy Board (NEB or the 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 National Energy Board Act (NEB Act) and include regulating:
- The construction, operation, and abandonment of pipelines that cross international borders or provincial/territorial boundaries, as well as the associated pipeline tolls and tariffs;
- The construction and operation of international power lines and designated inter-provincial power lines; and
- Imports of natural gas and exports of crude oil, natural gas liquids, natural gas, and electricity.
Additionally, the Board has regulatory responsibilities for oil and gas exploration and production activities on frontier lands not otherwise regulated under joint federal/provincial accords. These regulatory responsibilities are set out in the Canada Oil and Gas Operations Act (COGO Act) and the Canada Petroleum Resources Act. These responsibilities apply to the West Coast offshore, the Northwest Territories, Nunavut, the Arctic offshore, Hudson Bay, parts of the Gulf of St. Lawrence and the Bay of Fundy, and onshore Sable Island.
The NEB has environmental responsibilities under the Canadian Environmental Assessment Act (CEA Act), and the Mackenzie Valley Resource Management Act, as well as under the NEB Act. Certain Board inspectors are appointed 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 that fall within the jurisdiction of the federal government. The Board reports to Parliament through the Minister of Natural Resources.
Strategic Outcome(s) and Program Activity Architecture (PAA)
The figure below illustrates the NEB’s strategic outcome and program activity architecture. The Board’s program activities and program sub activities all contribute to achieving its strategic outcome.
Text description of this graph
Organizational Priorities
Performance/Priority Status Legend
|
Exceeded: More than 100 per cent of the expected level of performance (as evidenced by the indicator and target or planned activities and outputs) for the expected result or priority identified in the corresponding Report on Plans and Priorities (RPP) was achieved during the fiscal year. Met all: 100 per cent of the expected level of performance (as evidenced by the indicator and target or planned activities and expected outputs) for the expected result or priority identified in the corresponding RPP was achieved during the fiscal year. Mostly met: 80 to 99 per cent of the expected level of performance (as evidenced by the indicator and target or planned activities and expected outputs) for the expected result or priority identified in the corresponding RPP was achieved during the fiscal year. Somewhat met: 60 to 79 per cent of the expected level of performance (as evidenced by the indicator and target or planned activities and outputs) for the expected result or priority identified in the corresponding RPP was achieved during the fiscal year. Not met: Less than 60 per cent of the expected level of performance (as evidenced by the indicator and target or planned activities and outputs) for the expected result or priority identified in the corresponding RPP was achieved during the fiscal year. |
| Priority | Type[a] | Strategic Outcome(s) and/or Program Activity(ies) |
|---|---|---|
| Provide a clear and coherent regulatory framework | New | Energy Regulation |
| Status: Mostly met | ||
|
A clear and coherent regulatory framework, with supporting processes and tools, is essential for achieving the NEB’s strategic outcome by communicating the Board’s expectations to NEB-regulated companies.
|
||
[a] “Type” is categorized as follows: Previously committed to—committed to in the first or second fiscal year before the subject year of the report; Ongoing—committed to at least three fiscal years before the subject year of the report; and New—newly committed to in the reporting year of the Departmental Performance Report.
| Priority | Type | Strategic Outcome(s) and/or Program Activity(ies) |
|---|---|---|
| Improve performance of regulated companies | New | Energy Regulation |
| Status: Met all | ||
|
The NEB’s ability to influence the behaviours of NEB-regulated companies in key areas (i.e. safety, environment, public participation, financial integrity, emergency management, and security) significantly contributes to the achievement of its strategic outcome.
|
||
| Priority | Type | Strategic Outcome(s) and/or Program Activity(ies) |
|---|---|---|
| Provide timely regulatory decisions in the Canadian public interest | New | Energy Regulation |
| Status: Mostly met | ||
|
The Board’s ability to provide timely regulatory decisions is a cornerstone of delivering on its strategic outcome by helping to ensure that the rights and interests of those affected by NEB-regulated facilities and activities are respected and to enable efficient energy markets.
|
||
| Priority | Type | Strategic Outcome(s) and/or Program Activity(ies) |
|---|---|---|
| Provide relevant, neutral and credible energy information | New | Energy Information |
| Status: Mostly met | ||
|
Through its Energy Information Program, the NEB provides a range of energy information products to help Canadians better understand energy use in Canada and the Board’s regulatory role.
|
||
| Priority | Type | Strategic Outcome(s) and/or Program Activity(ies) |
|---|---|---|
| Ensure the NEB has the capacity to effectively deliver on its mandate | New | Internal Services |
| Status: Met all | ||
|
Effective management and leadership support the achievement of the NEB’s strategic outcome by enhancing organizational performance.
|
||
Risk Analysis
Organizational Context
In working to achieve its strategic outcome, the NEB must consider the context in which it operates. During 2010-11, the global economic recovery from the recession became more firmly entrenched and Canada’s economic recovery was stronger than expected. The oil industry was robust although the natural gas sector continued to experience historically low levels of activity due to low gas prices.
Crude oil prices climbed from about US$80 per barrel in March 2010 to US$103 per barrel in March 2011. A number of approved pipelines began operations, including Keystone, Enbridge’s Alberta Clipper, the Keystone Cushing Extension, and Enbridge Southern Lights. As well, development plans for several oil sands projects that were put on hold during the economic downturn were reinstated in 2010-11 as the global economic outlook continued to strengthen. During 2010-11, the oil sands were the focus of increased scrutiny from environmental stakeholders as production and activity levels increased.
Natural gas prices did not change from 2009-10, remaining in the range of US$4-5 per MMBtu. This stability was due to the recession’s impact on energy demand and the continued development of unconventional gas resources, including shale gas, throughout North America. Unconventional gas resources, particularly in northeastern British Columbia, continued to be developed in Canada. Pipeline infrastructure to connect this new natural gas supply to the North American pipeline grid moved forward during the year with completion of the Groundbirch pipeline in December 2010 and NEB approval of the Horn River pipeline in January 2011.
Electricity prices increased in both wholesale and end-use markets in 2010-11 as the economy improved. Compared with 2009-10, the weighted average of wholesale power prices in Alberta and Ontario was up by 45 per cent and 30 per cent, respectively. Regulated rates also increased in several other provinces. Demand for electricity increased in Alberta and Ontario, in part due to economic growth (Alberta) and high air conditioning demand in the summer (Ontario). In both provinces, coal-fired generation was reduced. Because of low precipitation in the major hydroelectricity regions (Quebec, British Columbia, Ontario and Manitoba), net-exports of electricity decreased by 40 per cent compared with the previous fiscal year.
Risks, Implications and Strategies
The NEB takes seriously any potential threats to public safety and the environment. In 2010-11, significant oil spills in the United States had immediate and potentially enduring effects on how Canadians regard the safety of energy systems. The level of scrutiny and demand for accountability from Canadian stakeholders has never been higher. Canadians want to be assured that all is being done to prevent similar incidents in Canada. Accordingly, the NEB announced in May 2010 that it would review Arctic safety and environmental drilling requirements. The Board is proactively preparing for future applications and learning from recent oil spills. To conduct this review, work activities were re-prioritized and resources were diverted from other northern projects such as improvements to the legislative framework in the North and the offshore.
Numbers of media requests, Access to Information Act (ATIA) requests and parliamentary appearances by the NEB increased considerably in 2010-11. This level of interest was unprecedented in the history of the Board and required a quick response to meet new demands. The organization developed new ATIA and parliamentary enquiry procedures and assigned additional resources through internal reallocation to process ATIA requests.
To enhance its strategic capacity to deal with new challenges and expectations, the Board initiated a reorganization at the beginning of 2011. Two new executive leadership positions, Strategic Leader–Regulatory and Strategic Leader–Business Integration, were created. A new executive management committee, the Strategic Leadership Group, was also established to enhance the Board’s strategic planning and direction function.
While comparable to recent years, the hearing load for 2010-11 was high from a historical perspective. Board staff participated in significant early engagement work with Aboriginal groups and stakeholders to promote awareness of the NEB’s processes and opportunities for public participation. This early engagement work, combined with the high number of hearings, increased the resources needed for hearings and required flexibility from staff in managing workloads.
Summary of Performance
2010-11 Financial Resources ($ millions)
| Planned Spending | Total Authorities | Actual Spending |
|---|---|---|
| 52.5 | 63.1 | 58.8 |
Please note: Financial Resources should equal the sum of the Total line for Program Activities and Internal Services.
2010-11 Human Resources (full-time equivalents-FTEs)
| Planned | Actual | Difference |
|---|---|---|
| 392.6 | 374.3 | 18.3 |
Please note: Amounts may vary due to rounding
| Performance Indicators | Targets | 2010-11 Performance[b] |
|---|---|---|
| Frequency of disabling injuries and pipeline failures | 0 disabling injuries and 0 pipeline failures; assessed via reported incidents and year by year improvement | Mostly met Disabling injuries: Zero. This is a decrease from three disabling injuries in 2009-10. Fatalities: One.[c] This is an increase from zero fatalities in 2009-10. Pipeline failures: One. This is a decrease from four failures in 2009-10. |
| Frequency of major releases into the environment (Major release = greater than 100m³ of liquid hydrocarbon) | 0 releases; assessed via reported incidents and year by year improvement | Met all Major releases >100m³: Zero. This is a decrease from three major releases in 2009-10. |
| Canadian energy and transportation markets are working well |
Adequate oil and natural gas pipeline capacity in place based on pipeline utilization |
Mostly met There was some apportionment on Canadian crude oil pipelines in 2010-11, indicating insufficient capacity. This was due to ruptures on adjacent U.S. crude oil pipelines, which reduced the ability of Canadian crude to reach U.S. markets. This resulted in some production being shut-in. There was adequate capacity on natural gas pipelines and petroleum product pipelines. Oil and gas prices in Canada tracked those in the U.S., indicating that Canadian markets worked well. Pipeline shipper satisfaction averaged 3.48 on a scale of 1 to 5 (1 = very dissatisfied and 5 = very satisfied). This is lower than the average of 3.54 for the previous two survey years. Key areas of concern for shippers were customer service and operational issues; however, 55 per cent of shippers reported being satisfied or very satisfied with service overall. |
[b] All statistics in this report are reported based on the fiscal year. Statistics in other NEB publications, such as the Annual Report and Safety Performance Indicator reports, are based on the calendar year. This affects comparability of data between publications.
[c] Worker was involved in a motor vehicle accident.
| Program Activity | 2009-10 Actual Spending ($ millions) |
2010-11[d] ($ millions) | Alignment to Government of Canada Outcome | |||
|---|---|---|---|---|---|---|
| Main Estimates |
Planned Spending |
Total Authorities[e] |
Actual Spending |
|||
| Energy Regulation | 29.1 | 23.9 | 23.9 | 32.8 | 30.8 | Strong Economic Growth |
| Energy Information | 6.8 | 4.0 | 4.0 | 7.6 | 7.2 | Strong Economic Growth |
| Total | 35.9 | 27.9 | 27.9 | 40.4 | 38.0 | |
[d] Commencing in the 2009–10 Estimates cycle, the resources for Program Activity: Internal Services is displayed separately from other program activities; they are no longer distributed among the remaining program activities, as was the case in previous Main Estimates. This has affected the comparability of spending and FTE information by program activity between fiscal years.
[e] There are variances between planned spending and total authorities/actual spending because planned spending did not include funding received for the NOVA Gas Transmission Ltd. system, the LMCI and the Enhanced Aboriginal Engagement program.
| Program Activity | 2009-10 Actual Spending ($ millions) |
2010-11 ($ millions) | |||
|---|---|---|---|---|---|
| Main Estimates |
Planned Spending |
Total Authorities |
Actual Spending |
||
| Internal Services | 20.3 | 24.6 | 24.6 | 22.7 | 20.8 |
Expenditure Profile
The NEB is funded through parliamentary appropriations. The Government of Canada recovers approximately 90 per cent of the appropriation from the regulated industry. The revenues are deposited directly into the Consolidated Revenue Fund. This process is regulated by the Cost Recovery Regulations under the NEB Act.
The NEB spending trend shows that expenditures have increased over the last three years. Spending increased in 2008-09 due to negotiated changes to the collective agreement and incremental FTEs as approved by the Treasury Board. In 2009-10, spending increases were primarily attributable to the Board’s decision in February 2009 to transfer jurisdiction of TransCanada Pipeline’s NOVA Gas Transmission Ltd. (NGTL) system to the NEB. Funding was received for the additional FTEs required as a result of this increase in regulatory responsibility. These FTE positions were partially filled in 2009-10.
In 2010-11, spending increased as the NEB realized the full impact of the transfer in jurisdiction of the NGTL system and finished staffing the additional FTE positions. Spending also increased due to the Arctic Review initiative.
Spending Trend
($ millions)
Text description of this graph
- Main estimates increased in 2010-11 because of the inclusion of funding from an approved Treasury Board Submission the previous year ($9.6 million for the NGTL system, the LMCI and the Enhanced Aboriginal Engagement program).
- Planned spending is aligned with the main estimates each year. Therefore, the figures are equal for 2009-10 and 2010-11.
- Total Authorities increased in 2009-10 as a result of the Treasury Board Submission noted above. Therefore, total authorities in 2010-11 are virtually equal to the previous year.
- Actual Spending increased year over year because the Board was able to augment the net staff complement over time as a result of the additional funding from the Treasury Board Submission noted above. However, the Board is still not fully staffed. The lapse for the year was 6.8 per cent ($4.3 million). This was a result of lapses in the Participant Funding Program, the Hearing Reserve, and vacant positions.
Estimates by Vote
For information on our organizational Votes and/or statutory expenditures, please see the 2010–11 Public Accounts of Canada (Volume II) publication. An electronic version of the Public Accounts is available on the Public Works and Government Services Canada website.[1]
Section II: Analysis of Program Activities by Strategic Outcome
Strategic Outcome
The NEB has a single strategic outcome to which all its program activities and their expected results contribute:
Safe and secure pipelines and power lines built and operated in a manner that protects the environment and enables efficient energy markets.
Program Activity: Energy Regulation
This program provides the Canadian public, project proponents and other government agencies with regulation of international and designated interprovincial power lines; construction, operations, and tolls and tariffs on international and interprovincial pipelines; energy trade; and exploration and development in certain frontier and offshore areas. 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 public interest is inclusive of all Canadians and refers to a balance of economic, environmental and social interests that change as society’s values and preferences evolve over time.
| Planned Spending | Total Authorities | Actual Spending |
|---|---|---|
| 23.9 | 32.8 | 30.8 |
| Planned | Actual | Difference |
|---|---|---|
| 178.2 | 194.6 | 16.4 |
| Expected Results |
Performance Indicators |
Targets | Performance Status |
|---|---|---|---|
| NEB-regulated facilities and activities are safe and secure The environment is protected throughout the lifecycle of NEB-regulated facilities and activities Canadians benefit from efficient energy infrastructure and markets The rights and interests of those affected by NEB-regulated facilities and activities are respected |
Companies have adequate and effectively implemented safety, integrity and environmental management systems and programs | 100% of companies regulated by the NEB have safety, integrity and environmental systems and programs in place | Unable to assess Adequacy and effectiveness of company management systems are assessed through the NEB audit compliance process. Three audits were completed this year, and while the NEB is able to assess the adequacy and effectiveness of the management systems and programs for the companies that were audited, it is unable to meet the target of 100 per cent of companies. As a result, this measure cannot be assessed adequately due to the small sample size. |
| Percent of planned compliance activities completed | 100% of planned compliance activities are completed | Mostly met 97 per cent of planned safety, security and environmental compliance activities were completed. Planned compliance activities not completed in 2010-11 are included in the 2011-12 Compliance Verification Plan. |
|
| The Board’s regulatory processes are measurably efficient and effective | All NEB service standards for its regulatory services are met | Mostly met Met service standards on 277 of 284 regulatory services delivered.[f] |
|
| Percent of planned financial regulatory audits completed | 100% of planned financial regulatory audits are completed | Met all 100 per cent of planned financial regulatory audits were completed. |
|
| Stakeholders are satisfied with NEB processes, information and interaction | 80% of stakeholders who provide feedback are satisfied with NEB processes, information and interaction | Unable to assess This measure cannot be assessed as the sample size of data collected was too small to reach a conclusion. |
[f] NEB Service Standard Results, http://www.neb-one.gc.ca/clf-nsi/rpblctn/rprt/dprtmntlprfrmncrprt/2010-2011srvcstndrd-eng.html
Performance Summary and Analysis of Program Activity
Generally, the NEB performed well against its expected results, performance indicators and targets. In 2010-11, the Board focused efforts on its organizational priorities to meet expected results for the Energy Regulation Program and, ultimately, its strategic outcome.
Safety, Security and Environmental Protection
Industry Performance
The safety of the public and the people who build and operate NEB-regulated pipelines, and the protection of the environment, are of paramount importance to the Board. The Board uses data from its compliance verifications (e.g. inspections and audits) and compulsory reporting of environmental and safety incidents by regulated companies under the Onshore Pipeline Regulations, 1999 (OPR-99) to manage its compliance oversight activities. This information is supplemented by a voluntary reporting initiative for safety and environmental performance indicators.[2] Injury frequencies, incident trends, compliance activity scorecards and other indicators help the NEB identify where improvement is needed and which companies require a higher level of compliance oversight.
Overall, the pipeline industry continued to be a safe mode of transportation for delivering energy to Canadians in 2010-11.[3]
Under the OPR-99:
- There were no disabling injuries and one fatality[4] on NEB-regulated pipelines, compared with three disabling injuries and no fatalities in 2009-10.
- There was one pipeline failure, down from four failures in 2009-10.
- There were no major releases of liquid hydrocarbon into the environment. This is down from three major releases in 2009-10.
- There were 67 natural gas releases, an increase from 49 releases in 2009-10.
- There were 84 unauthorized crossing activities,[5] which is a significant decrease from 145 in 2009-10.
Under the OPR-99 and the COGO Act:
- There were 185 incidents.[6] This is an increase from 157 incidents in 2009-10.
Under the COGO Act:
- There were ten releases of 100 L or more of hydrocarbons or other contaminants reported under the COGO Act (from oil and gas exploration and production facilities located in the Northwest Territories). This is comparable to 11 releases in 2009-10.
The NEB follows up on every reported incident to determine whether company corrective actions are appropriate. The NEB takes a proactive approach to preventing incidents and Board staff use compliance tools such as inspections, audits and participation in company emergency response exercises to promote improved safety performance of NEB-regulated facilities. When required, the NEB takes direct action. In 2010-11, the Board:
- Ordered pressure restrictions for five pipelines as a precautionary measure to mitigate safety concerns;
- Issued a safety advisory to industry regarding the evaluation of hazards associated with shallow dents on pipelines in response to two incidents caused by fatigue crack failure;
- Authorized Board Members under Section 15 of the NEB Act to participate in technical compliance meetings to reinforce the Board’s expectations and to report back to the full Board;
- Observed the response efforts by U.S. authorities to the Enbridge pipeline spill near Marshall, Michigan to learn from the incident; and
- As co-champion of the Canadian Common Ground Alliance, worked with national and regional partners to promote safe construction practices near buried infrastructure through workshops and tradeshows held across Canada.
In recent years, the Board has observed an increasing trend in the number and severity of incidents being reported by NEB-regulated companies. To understand the reasons behind this recent trend, the Board analyzed over 100 incidents related to safety, integrity and damage prevention programs. The analysis identified both technical and management system root causes for the incidents. The Board shared the results of this analysis at a full-day workshop to discuss strategies to reduce incidents. More than 60 participants from NEB-regulated companies, industry associations, consultants and other regulators attended the workshop. The outcomes and lessons learned from the incident analysis and workshop discussions will be integrated into ongoing NEB activities, projects and process enhancements.
Northern and Offshore Initiatives
In May 2010, the Board announced that it would review Arctic safety and environmental offshore drilling requirements.[7] The review is examining the best available information concerning the hazards and risks associated with offshore drilling activities in the Canadian Arctic, and the safety measures to both prevent and respond to accidents and malfunctions. The outcome of the review will be a public report clarifying the filing requirements for applications for offshore drilling in the Canadian Arctic. In 2010-11, Board Members and staff met with Aboriginal groups, Northern governments and Northern communities to gain an understanding of their perspective on offshore drilling activities. The Arctic Offshore Drilling Review will be completed by the end of 2011.
In late 2010, the Board hosted a Northwest Territories (NWT) Board Forum meeting. The NWT Board Forum gives organizations involved in land use planning, environmental assessment, land and water regulation, and resource management an opportunity to learn from one another and to coordinate activities. NWT Board Forum members noted that this Forum provided a number of positive results including the development of a strategic plan for the Forum and the identification of cooperation arrangements and training requirements for Board Forum members.
The NEB also worked with the Canada-Newfoundland and Labrador Offshore Petroleum Board and the Canada-Nova Scotia Offshore Petroleum Board to develop joint guidance notes in support of the Canada Oil and Gas Drilling and Production Regulations. This cooperation resulted in the Environmental Protection Plan Guidelines and Safety Plan Guidelines being co-published and released in March 2011. The guidelines provide interested parties with an understanding of regulatory requirements and how to meet those requirements through the use of best practices, codes and standards.
Protecting the Environment
In 2010-11, the NEB signed a Memorandum of Understanding with the Minister of the Environment to recognize the NEB as a substitute authority for environmental assessments conducted by a review panel under the CEA Act. This means the NEB will be able to independently conduct environmental assessments for most NEB projects that would formerly have required a review panel, thereby increasing efficiency in the federal environmental assessment process.
During the year, the Board initiated a project to update the environmental and socio-economic assessment (ESA) sections of its Filing Manual for pipeline applications. The Filing Manual update project provided an opportunity for interested parties and the Board to engage in dialogue, improve understanding of environmental and socio-economic review processes currently in place, and generate options for improvement to the ESA section of the Filing Manual. In November 2010, the Board released a draft version and invited public review and comment to ensure that the perspectives of stakeholders are understood and considered for the update. Over 50 individuals and organizations participated in the process, including Environmental Non-Government Organizations (ENGOs), Aboriginal groups, other federal departments, provincial or territorial governments, academics, regulated companies, environmental planners, consultants and other industry-related organizations. The revised ESA section of the Filing Manual will be released in 2011.
The NEB also developed a draft Remediation Process Guide for NEB-regulated companies in consultation with stakeholders. The Guide provides a clear process for companies to follow when collecting and submitting information to the NEB about soil remediation and groundwater contamination. It will be finalized and released in 2011. Information about environmental protection on the NEB’s website has also been enhanced.[8]
The Management System Approach
The Board’s OPR-99 requires NEB-regulated companies to develop and implement management and protection programs. These programs promote the safety and security of people, pipelines and property, and the protection of the environment. In January 2011, the NEB requested public comment on a Notice of Proposed Regulatory Change (NOPRC 2011-01). This proposed amendment clarifies Board expectations that companies have a systematic, comprehensive and proactive approach to managing risk, and satisfying requirements under the NEB Act and the OPR-99.
The NEB released Proposed Regulatory Change 2010-01 in May 2010, setting the expectation that companies shall develop, document, implement and maintain a security program in accordance with the Canadian Standards Association Standard CSA Z246.1-09. The Standard includes criteria for establishing a security management program to identify and manage security threats and associated risks. It also requires companies to have mitigation and response processes and procedures to prevent and minimize adverse impacts of security incidents on people, the environment, assets, and economic stability. The effective date for Proposed Regulatory Change 2010-01 is 1 April 2011.
The Board also reviewed its audit program of NEB-regulated companies’ management and protection programs and published a standardized evaluation and audit protocol. The audit protocol will provide guidance on, and influence companies’ management and protection programs, to meet legal requirements and conditions within applicable Board Certificates or Orders. The NEB also continued to develop a data management tool to support its risk-based approach to verifying company compliance.
Respecting the Rights and Interests of those Affected by NEB-regulated Facilities
Throughout the year, the NEB continued work on a number of initiatives related to ensuring that the rights and interests of those affected by NEB-regulated facilities and activities are respected.
During the Land Matters Consultation Initiative (LMCI) consultation process in 2008-09, landowners told the NEB that a lack of participant funding was a significant barrier to participating in certain NEB regulatory processes. In July 2010, the NEB gained legislative authority to establish a Participant Funding Program (PFP) under the NEB Act. Under the PFP, funding is available to individuals, landowners, incorporated non-industry not-for-profit organizations, and Aboriginal groups who are interested in participating in oral facility hearings. In 2010-11, $250,000 in participant funding was made available to support public participation in two hearing processes.[9]
The NEB also made progress on several other LMCI commitments. Specifically the Board:
- Successfully piloted a multi-stakeholder group to develop and release Guidance for Safe Crossings of NEB-Regulated Pipelines Using Agricultural Vehicles and Mobile Equipment;
- Continued to develop the NEB’s public participation program and examined the feasibility of extending the management system approach to encompass the rights and interests of those affected by NEB-regulated facilities and activities. The multi-stakeholder group will continue this work;
- Released a renewed version of the publication Pipeline Regulation in Canada: A Guide for Landowners and the Public;
- Updated the NEB website to include a section dedicated to Public Participation and Land Matters;[10]
- Continued work on a 5-year Action Plan towards reaching a 2014 milestone for pipeline companies to start collecting funds for pipeline abandonment through pipeline tolls; and
- Established a multi-stakeholder committee to research the physical issues of pipeline abandonment and to develop a knowledge base for future decisions.
While much progress was made in 2010-11, some LMCI actions have not yet been completed and will continue in 2011-12.
Efficient Energy Infrastructure and Markets
To fulfill its strategic outcome, the NEB promotes efficient energy infrastructure and markets. As part of its regulatory mandate, the NEB regulates international and interprovincial pipeline and electrical transmission facilities, pipeline tolls and tariffs, and energy imports and exports.
In 2010-11, the NEB regulated approximately 71,000 kilometres of pipelines and 1,400 kilometres of power lines across Canada. Canada exported approximately $80.1 billion worth of crude oil, petroleum products, natural gas, and natural gas liquids under NEB export authorizations. While most of this was shipped by pipeline, a small portion was transported by tankers, trucks, and rail. NEB-regulated international power lines enabled electricity exports worth approximately $1.9 billion. The Canadian energy industry accounted for 6.7 per cent of Canada’s GDP in 2010-11. Revenue generated from Canadian energy exports totalled $97.4 billion and accounted for 23.7 per cent of total Canadian export revenue.
An important part of promoting efficient energy infrastructure and markets is making timely regulatory decisions in the Canadian public interest. During the fiscal year, the Board issued six hearing decisions on major applications, notably the Mackenzie Gas Project, Nova Gas Transmission Ltd.’s Horn River Project, and the Westcoast Energy Inc. Dawson Gas Processing Facility and associated pipelines. During the year, the NEB also continued to support the efforts of the Major Projects Management Office to clarify and streamline major project assessments. The NEB met most of its regulatory process service standards in 2010-11.
To continually improve application assessment processes, the Board made changes to increase the efficiency of processing short-term import orders for natural gas and short-term export orders for oil, natural gas, natural gas liquids and petroleum products. The NEB removed the requirement for applicants to submit hard copies of their applications if using the Online Application System. This reduced processing times for these applications. The Regulatory Tracking System, an internal online tool to track and monitor application assessment, was also introduced in 2010-11.
Lessons Learned
An important innovation within the Energy Regulation Program in 2010-11 was the launch of the new Participant Funding Program. The Board’s higher than anticipated hearing load in 2010-11 resulted in an accelerated learning curve for the program. Staff had to deliver strong administrative oversight for the PFP, while making sure that it was compatible with existing application and early stakeholder engagement processes. Despite these challenges, implementation was successful and, in 2010-11, the NEB awarded participant funding to support public participation in two hearing processes. Delivery of the program will continue to be a learning process as Board staff track and monitor current hearings to which participant funding applies to improve the program in 2011-12.
Program Activity: Energy Information
The program provides the Board, industry, policy makers, and the Canadian public with energy industry and market surveillance, including the outlook for supply and demand of energy commodities in Canada, to assist in decision making regarding energy infrastructure and markets. This program informs Canadians on energy market developments and issues related to the Board’s regulatory mandate, which are primarily in the gas, oil and electricity market sectors, and under Part VI of the National Energy Board Act by providing market analysis to determine whether Canadians are able to access energy at fair market prices.
| Planned Spending | Total Authorities | Actual Spending |
|---|---|---|
| 4.0 | 7.6 | 7.2 |
| Planned | Actual | Difference |
|---|---|---|
| 30.2 | 44.9 | 14.7 |
| Expected Results |
Performance Indicators |
Targets | Performance Status |
|---|---|---|---|
| Canadians benefit from efficient energy infrastructure and markets | Feedback from internal and external clients on Energy Information Program products via questionnaires after workshops, comment cards with publications, interviews with clients NEB website provides timely and relevant energy market information |
80% of feedback from clients indicates they find Energy Information Program products useful and relevant 5% increase in visits to content on the NEB website from previous year |
Exceeded Feedback indicates that 87 per cent of clients find Energy Information Program products useful and relevant. Unable to assess In 2010-11, the NEB had 470,675 visits to energy information content on its website. However, 2009-10 comparison data is unavailable due to issues with the web tracking tool, so the NEB cannot assess 2010-11 performance against the target. |
Performance Summary and Analysis of Program Activity
Through the Energy Information Program (EIP), the NEB provides objective, accurate and timely information about Canada's energy system. In 2010-11, the NEB streamlined the EIP to confirm its alignment with the NEB’s mandate. The Board’s EIP is directly linked to the ongoing monitoring requirements under the import and export (Part VI) aspects of the NEB Act. The NEB monitors energy markets and provides its view of the reasonably foreseeable requirements for energy use in Canada having regard to trends in the discovery of oil and gas. This analysis then informs the Board’s regulatory decisions. It also enables the NEB to produce publicly available assessments of energy trends, events and issues which may affect Canadian energy markets and the supply and demand for energy.
In 2010-11, the NEB continued to build its capacity to collect and analyze energy market information through several initiatives. Specifically it:
- Updated the natural gas liquids component of the Commodities Tracking System. This is part of a project to enhance data quality by converting to an online system for gathering export and import data;
- Collected market intelligence by monitoring market trends; reviewed external research related to energy market developments; and attended and participated in conferences, workshops and seminars;
- Improved analytical tools to aid in analyzing complex energy markets and to allow the Board to contribute to national and international energy analysis; and
- Continued to engage stakeholders who collect and disseminate energy information.
The Board published a range of energy information reports in 2010-11.[11] Topics included natural gas resource assessments, natural gas supply costs in Western Canada, Canadian natural gas deliverability projections, an energy overview of 2009, top energy stories of 2010, energy demand in the industrial sector, energy use in the North, and summer and winter Energy Outlooks. The NEB also continued to update the Energy Pricing Information for Canadian Consumers web page throughout the year. Additionally, the Board improved the accessibility of its EIP products by producing more concise reports on more varied topics, emphasizing plainer language, and continuing to use its website as a more accessible delivery mechanism for reports.
In 2010-11, internal EIP products that keep Board Members and staff informed of current and emerging energy issues were streamlined, resulting in improved quality of materials and shorter distribution times. The Board also engaged a number of ENGOs on its key products and leveraged its working relationship with the Canadian Environmental Network to explore how the EIP could be of greater interest to ENGOs.
Lessons Learned
In 2010-11, NEB analysis reaffirmed that Canada has abundant energy resources. Supply continued to increase, while demand for resources moderated. Canadian energy markets remain complex and are constantly evolving. For this reason, there is a need for careful monitoring of these markets and the dissemination of data and analysis on energy markets and issues facing the energy sector. This has been, and will continue to be, the focus of the NEB’s EIP.
During the year, the NEB streamlined the EIP to confirm its alignment with the Board’s regulatory mandate to monitor energy markets. The Board also introduced new measurement tools to assess client satisfaction with the EIP. The results will directly influence future aspects of the program to better meet Canadians’ energy information needs.
Program Activity: Internal Services
Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.
| Planned Spending | Total Authorities | Actual Spending |
|---|---|---|
| 24.6 | 22.7 | 20.8 |
| Planned | Actual | Difference |
|---|---|---|
| 184.1 | 134.8 | 49.3 |
Please note: The difference between planned FTEs and actual FTEs is due to the fact that the planned FTE number in the 2010-11 RPP was estimated far in advance of actual, detailed planning for the fiscal year. When planning was completed, the original planned number was out of date.
Performance Summary and Analysis of Program Activity
The People Strategy
Historically, attraction and retention of quality staff has been a challenge for the NEB in a competitive energy sector labour market. While the oil industry increased employment levels this year, the relatively low levels of activity in natural gas exploration and development reduced competition in Calgary’s labour market in 2010-11. This helped slow the NEB’s employee turnover rate. The organization’s attrition rate was 6.9 per cent, which is the lowest it has been in the past eight years. The NEB hired 47 full-time employees in 2010-11, representing 7.5 per cent of its total FTE complement by the end of the year. These employees were hired to meet the Board’s growing workload and to fill existing vacancies.
The continued implementation of the NEB People Strategy to create a positive working environment was another factor that contributed to staff retention during the year. In 2010-11, the NEB actively promoted leadership development to improve the NEB’s performance. The Board launched an Emerging Leaders Program to supplement existing leadership programs. The NEB also renewed its commitment to enhancing current leadership through the People Leadership Action Plan. Implementation of the plan will result in revised leadership competencies, behaviours and measures that will be incorporated into leaders’ annual accountabilities.
The Board also started redesigning its job classification system in 2010-11. The NEB’s current classification system was considered cutting edge when it was implemented in the 1990s, but has since become outdated. It is expected that the move to a new classification structure will promote improved career progression and performance management, thereby leading to higher employee satisfaction and retention.
In past years, the NEB’s Staffing Management Accountability Framework identified the need for the NEB to develop an organizational strategic human resources plan to help the organization proactively anticipate emerging human resource needs. Work on the plan began in 2010-11 and will continue in 2011-12.
The Board’s success in creating a positive work environment has been externally recognized. The NEB was named one of Canada’s Top 100 Employers for 2011, one of Alberta’s Top 50 Employers, and one of Canada’s Top Family-Friendly Employers. In a survey conducted by Towers Watson, the NEB again this year showed higher employee engagement scores than the Canadian norm.[12]
Improving Corporate Effectiveness and Resource Management
During the year, the organization worked to revise its financial governance structure to improve integration of expenditure management and budgets. This included implementing a live finance reporting system for expenditures and budgets which allows managers real-time access to budgets. Information Management and Information Technology planning were also aligned with the revised financial governance structure to enable a seamless integration of IM/IT considerations in financial management decisions. New strategic IM and IT plans were developed during the year. As well, the NEB continued work on its essential record conversion project, converting 69,634 essential records during the year.
In 2010-11, significant changes were made to the NEB’s Access to Information and Privacy program. The NEB saw an unprecedented number of Access to Information Act requests during the year. To meet demand, the Board assigned additional resources through internal reallocation, and developed new processes and awareness materials.
In 2010-11, the NEB worked to improve its corporate processes, tools, and behaviours to enhance organizational performance. In 2010, the NEB began recording and managing all of its work activities in the Work Management Tool (WMT). The WMT is a one-stop tool to support the business planning process and its implementation, and is aligned with the NEB’s resource planning tool. The WMT will enhance the NEB’s ability to proactively assess and address current and emerging resource needs. As well, the Board’s Quality Management System (QMS) continues to provide a useful mechanism to document processes and record improvements. During the year, the NEB continued to work on having all of its QMS processes meet baseline requirements in 2010-11. This target was not achieved in 2010-11 due to competing demands. For 2011-12, the NEB will continue to work on improving its processes.
Lessons Learned
Competing priorities and workload growth put pressures on the NEB’s internal services program during the year. To maximize existing internal services resources, internal services staff needs to be engaged early in planning processes. To achieve this, the NEB will work to strengthen its integrated planning process in 2011-12. In fall 2010, the NEB underwent its second Management Accountability Framework (MAF) Assessment. The Board will implement action plans to address identified deficiencies and to continue to build on strengths.
Section III: Supplementary Information
Financial Highlights
| % Change | 2010-11 | 2009-10* | |
|---|---|---|---|
| Total Assets | 3.1% | 40,880 | 39,658 |
| Total Liabilities | -23.1% | 15,741 | 20,467 |
| Equity of Canada | 31.0% | 25,139 | 19,191 |
| Total | 3.1% | 40,880 | 39,658 |
*2009-10 restated
During the year, the NEB adopted the revised Treasury Board Accounting Standard (TBAS) 1.2 - Departmental and Agency Financial Statements which is effective for the Board for the 2010-11 fiscal year. The major change in NEB accounting policies required by the adoption of the revised TBAS 1.2 is the recording of amounts due from the Consolidated Revenue Fund as an asset on the Statement of Financial Position.
The most significant change in the Statement of Financial position relates to liabilities and, specifically, Deferred Revenue which represents the balance at year-end of unearned regulatory levies. The NEB cost recovers its annually estimated expenditures on a quarterly basis and recognizes the revenue in the fiscal quarter related to these estimated expenditures. A change in the National Energy Board Cost Recovery Regulations in 2009-10 resulted in a one-time transitional annual billing for the period January to December 2010. One-quarter of this revenue has been recognized in 2009-10 and three-quarters has been recorded as Deferred Revenue related to the 2010-11 fiscal year.
| % Change | 2010-11 | 2009-10 | |
|---|---|---|---|
| Total Expenses | 9.3% | 66,834 | 61,155 |
| Total Revenues | 4.7% | 65,260 | 62,344 |
| Net Cost of Operations | -232.4% | 1,574 | (1,189) |
A change in the accounting treatment for the billing adjustment was implemented during the 2009-10 fiscal period. In previous fiscal periods, the billing adjustment was recognized when invoiced. Beginning in 2009-10, the billing adjustment will be recognized in the period in which the variance arises. In this transition year, the billing adjustment applicable to both 2008 and 2009 was recorded in fiscal year 2010 (2009-10), resulting in a significant increase to revenue and a corresponding decline in 2011 (2010-11). This should stabilize on a go-forward basis and the normal trends expected due to the cost-recovery process will be evident.
Financial Highlights Charts and/or Graphs
Revenues vs. Expenses
(000's)
Text description of this graph
Financial Statements
The NEB’s Financial Statements can be found on the NEB’s website.[13]
List of Supplementary Information Tables
All electronic supplementary information tables found in the 2010–11 Departmental Performance Report can be found on the Treasury Board of Canada Secretariat website.[14]
- Sources of Non-Respendable Revenue
- User Fees Reporting
- Green Procurement
- Response to Parliamentary Committees and External Audits
- Internal Audits and Evaluations
Section IV: Other Items of Interest
Organizational Contact Information
| Address: | National Energy Board 444 Seventh Avenue SW Calgary, Alberta T2P 0X8 |
| Email: | info@neb-one.gc.ca |
| Internet: | http://www.neb-one.gc.ca |
| Telephone: | 403-292-4800 |
| Toll free: | 1-800-899-1265 |
| Fax: | 403-292-5503 |
| Toll free fax: | 1-877-288-8803 |
| TTY (teletype): | 1-800-632-1663 |
Additional Information
NEB Strategic Plan
The NEB’s Strategic Plan is available on the NEB’s website.[15]
NEB Annual Report
For more information on the NEB’s activities in 2010, the NEB’s 2010 Annual Report is available on the NEB’s website.[16]
Footnotes
[1] See Public Accounts of Canada 2010, http://www.tpsgc-pwgsc.gc.ca/recgen/txt/72-eng.html.
[2] Focus on Safety and the Environment, http://www.neb-one.gc.ca/clf-nsi/rsftyndthnvrnmnt/sfty/sftyprfrmncndctr/sftyprfrmncndctr-eng.html
[3] All statistics in this report are reported based on the fiscal year. Statistics in other NEB publications, such as the Annual Report and Safety Performance Indicator reports, are based on the calendar year. This affects comparability of data between publications.
[4] Worker was involved in a motor vehicle accident.
[5] Unauthorized crossing activities include excavation, construction, or other activities which would impede access to, or visibility of, the right of way.
[6] Incidents include serious injuries, unintended gas releases, oil leaks, fires and pipeline ruptures.
[7] NEB Arctic Offshore Drilling Review, http://www.neb-one.gc.ca/clf-nsi/rthnb/pplctnsbfrthnb/rctcffshrdrllngrvw/rctcffshrdrllngrvw-eng.html
[8] NEB Environment Page, http://www.neb-one.gc.ca/clf-nsi/rsftyndthnvrnmnt/nvrnmnt/nvrnmnt-eng.html
[9] Funding Review Committee Reports, http://www.neb-one.gc.ca/clf-nsi/rthnb/pblcprtcptn/prtcpntfndngprgrm/fndngrvwcmmttrprt-eng.html
[10] NEB Public Participation and Land Matters, http://www.neb-one.gc.ca/clf-nsi/rthnb/pblcprtcptn/nvlvngthpblc-eng.html
[11] NEB Energy Reports, http://www.neb-one.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/nrgyrprt-eng.html
[12] The Canadian norm comes from Towers Watson’s 2010 Global Workforce Study, which includes a cross section of Canadian industries.
[13] NEB Financial Statements, http://www.neb-one.gc.ca/clf-nsi/rpblctn/rprt/dprtmntlprfrmncrprt/2010-2011fnnclsttmnt-eng.html
[14] See 2010–11 Part III—Departmental Performance Reports (DPR): Supplementary Information (Tables), http://www.tbs-sct.gc.ca/dpr-rmr/2010-2011/index-eng.asp
[15] NEB Strategic Plan, http://www.neb-one.gc.ca/clf-nsi/rthnb/whwrndrgvrnnc/strtgcpln-eng.html
[16] NEB Annual Report, http://www.neb-one.gc.ca/clf-nsi/rpblctn/rprt/nnlrprt/nnlrprt-eng.html