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Message from the Chair and CEO

I am pleased to present this Report on Plans and Priorities to the people of Canada. The National Energy Board's (NEB or Board) mandate is to make energy related decisions in the public interest. In doing so, the Board considers the interests of all Canadians in relation to economic, environmental and social matters.

All of the Board's decisions are made in the context of whether a given course of action contributes to the public interest, both in the present and in the future. In the coming year, the NEB will exercise its regulatory decision making mandate when considering a number of significant energy infrastructure applications, including the Mackenzie Gas Project and the TransCanada PipeLines Keystone XL and Groundbirch Pipeline projects. The Board is also expecting an increasing number of contested toll and tariff matters to be filed.

The NEB provides Canadians with regulatory leadership by addressing difficult issues. For example, the NEB is clarifying its expectations for the regulated industry's public engagement programs. The NEB is also developing regulatory expectations for pipeline abandonment and right of way reclamation and related financial issues. With respect to potential oil and gas development in the North, the NEB is working in partnership with northern communities and governments on regulatory processes to continually improve environmental, social and economic outcomes. The NEB continues to work with the Major Projects Management Office, with the goal of providing industry with a single, efficient point of entry into federal processes while ensuring that projects, which are approved, are built in a safe manner while protecting the environment.

The Board provides oversight of safety, integrity, environment and economic issues throughout the lifecycle of all of its regulated facilities. With the addition in 2009 of the TransCanada Alberta System to the NEB's regulatory jurisdiction, the NEB became responsible for an additional 23,500 km of pipeline and associated facilities.

The NEB is focusing its energy information program on ensuring that Canadians have the information they need to make informed decisions.

As we embark on a new decade, I look forward to continuing to actively and effectively fulfill our energy mandate for the benefit of all Canadians.

Gaétan Caron
Chair and CEO

Section I - Agency Overview

1.1 Summary Information

Raison d'être

The NEB's primary purpose is to regulate pipelines and power lines, energy development and trade in the Canadian public interest.

Responsibilities

Established by Parliament in 1959, the NEB is an independent federal agency that regulates a portion of Canada's energy industry. The NEB regulates the construction and operation of pipelines that cross international or provincial borders, international power lines and designated interprovincial power lines, and pipeline tolls and tariffs. The NEB also regulates natural gas imports and exports, oil and natural gas liquid exports, electricity exports, and certain oil and gas exploration activities on frontier lands, particularly in Canada's North and certain offshore areas. In addition, the NEB provides Canadians with information about Canadian energy markets. The NEB reports to Parliament through the Minister of Natural Resources.

The main functions of the NEB are set out in the National Energy Board Act (NEB Act). The Board has additional regulatory responsibilities under the Canada Oil and Gas Operations Act (COGO Act) and under certain provisions of the Canada Petroleum Resources Act (CPR Act) for oil and gas exploration and activities on frontier lands not otherwise regulated under joint federal/provincial accords. In addition, some 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 facilities regulated by the Board.

The NEB's regulatory responsibilities for public safety, security and protecting the environment are set out in the NEB Act and the COGO Act. The NEB must also meet the requirements of the Canadian Environmental Assessment Act (CEA Act) and the Mackenzie Valley Resource Management Act. The Board's environmental responsibilities span three distinct phases: evaluating potential environmental effects of proposed projects; monitoring and enforcing terms and conditions during and after construction; and monitoring and regulating ongoing operations, including deactivation and abandonment. Through the Public Safety Act, 2002 the NEB has legislative authority for the security of pipelines and international power lines.

The NEB is an independent regulatory tribunal guided by the principles of natural justice and procedural fairness. The Board is a court of record and has certain powers of a superior court of record including those for the attendance, swearing and examination of witnesses; the production and inspection of documents; the enforcement of its orders; and the inspection of property. Aside from rare exceptions provided for in law, the Board's regulatory decisions and the accompanying Reasons for Decision are issued as public documents.

Strategic Outcome

The NEB strives to achieve the following strategic outcome in order to fulfill its purpose:

Safe and secure pipelines and power lines built and operated in a manner that protects the environment and enables efficient energy markets.

Program Activity Architecture

The chart below illustrates the 2010-2011 NEB program framework.

An Internal Services program activity also supports the strategic outcome and related activities.

1.2 Planning Summary

The table below provides a summary of total planned spending for next three fiscal years.

Financial Resources and Human Resources

	2009-2010	2010-2011	2011-2012
Financial Resources (million $)	52.2	50.4	47.2
Human Resources (Full Time Equivalents)	392.6	392.6	392.6

 

Strategic Outcome: Safe and secure pipelines and power lines built and operated in a manner that protects the environment and enables efficient energy markets.

Performance Indicators	Targets
Frequency of disabling injuries and pipeline failures	0 disabling injuries and 0 pipeline failures; assessed via reported incidents and year by year improvement
Frequency of major releases into the environment (Major release = greater than 100 m3 of liquid hydrocarbon)	0 releases; assessed via reported incidents and year by year improvement
Canadian energy and transportation markets are working well	Adequate oil and natural gas pipeline capacity in place based on pipeline utilization; similar Canadian and US energy markets have equivalent pricing; pipeline companies provide services which meet the needs of shippers

Program Activity	Expected Results	Forecast Spending (million $) 2009-10	Planned Spending (million $)			Alignment to Government of Canada Outcomes
			2010-11	2011-12	2012-13
Energy Regulation	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	29.24	23.9	22.9	21.4	Strong economic growth
Energy Information	Canadians benefit from efficient energy infrastructure and markets	4.96	4.0	3.8	3.6
Total		34.2	27.9	26.7	25.0

Contribution of Priorities to Strategic Outcome

Operational Priorities

Priorities	Type	Link to Strategic Outcome	Description
Provide a clear and coherent regulatory framework	New	SO-1	A clear and coherent regulatory framework, with supporting processes and tools, is essential for the successful delivery of the NEB's mandate and to support the Government of Canada's regulatory streamlining efforts. To meet this priority, the NEB will continue to develop its public participation program to ensure that the rights and interests of those affected by NEB-regulated facilities and activities are respected. The NEB will continue to modernize, align and streamline its regulations and activities, including more efficient coordination of federal environmental assessments. The NEB will also review its incident and investigation practices with the goal of allowing root causes of safety loss to be identified and resolved.
Improve performance of regulated companies	New	SO-1	The NEB's ability to influence the behaviors of regulated companies in key public interest areas (i.e., safety, environment, public participation, financial, integrity, emergency management, security, energy trade and conservation of resources) can significantly contribute to the achievement of the strategic outcome. The NEB will focus on measuring the performance of regulated companies to determine trends and need for regulatory action.
Provide timely regulatory decisions in the Canadian public interest.	New	SO-1	The Board's ability to provide timely regulatory decisions is the cornerstone of delivering on its strategic outcome. To meet this priority, the NEB will work toward increasing the effective engagement of stakeholders in its processes. The Board will also continue to improve its application assessment processes, including the use of further automation and continued support for improved environmental assessment coordination.
Provide relevant, neutral and credible energy information.	New	SO-1	Through its Energy Information Program, the NEB provides a range of energy information products to Canadians, including government and industry. To meet this priority, the NEB will continue to build and maintain capacity to collect and analyze energy market information. The NEB will provide timely, objective and relevant information to assist Canadians in making informed decisions on sustainable energy choices. The NEB will also enhance the accessibility of energy information products to external stakeholders, including the provision of historical frontier data in electronic format (subject to funding approval).

 

Management Priorities

Priorities	Type	Link to Strategic Outcome	Description
Ensure the NEB has the capacity to effectively deliver on its mandate.	New	SO-1	To support the delivery of its mandate and enhance its organizational performance during the upcoming period, the NEB will focus on effectively managing its resources, providing a positive working environment, and utilizing clear and consistent corporate processes, tools and behaviours.

Risk Analysis

The NEB proactively considers economic, environmental, safety and societal trends that may influence its ability to carry out its responsibilities and to deliver results to Canadians.

A number of factors are affecting emerging energy trends in Canada, including lower workforce and population growth, slower economic growth, additional demand management programs, and a heightened awareness of the environmental impacts of energy consumption. Unconventional sources of oil and gas are expected to contribute a larger proportion of the supply mix, with a projected increase in the oil sands contribution to Canadian oil exports as well as a projected increase in shale and tight gas production. Due to lower oil prices and availability of capital, several oil sand projects have been delayed. Further commercialization of this resource primarily depends on the speed of recovery from the global recession, oil price, construction costs and environmental requirements. Hydroelectric and nuclear capacity is projected to increase in the future, with the electricity supply in Canada becoming cleaner.

Overall, Canadians can expect energy markets to function well with energy prices balancing demand and supply. The integration of energy, environmental and economic considerations will continue to be essential elements of the decisions to be taken by the NEB.

Applications for physical development are becoming more complex due to increasingly scarce, remote or difficult to access energy reserves and rapidly developing technology. This increase in complexity heightens the need for safety, security and environmental expertise to enable the NEB to continue to provide regulatory leadership. As always, the NEB is highly concerned with any potential threat to public safety and the environment such as construction related injuries or oil spills.

While applications for the development of energy facilities and infrastructure slowed in 2009-2010, the NEB is expecting a steady and high rate of industry applications in the next few years, albeit with a shift in emphasis from facility applications to financial and toll hearings. The later are expected to be contentions but critical in order to provide rate certainty to the industry.

Non-industry stakeholders are increasingly raising concerns in a variety of venues and jurisdictions. Growing concern about the impacts of greenhouse gases and of implications of a carbon-constrained world contributes to public debate affecting energy choices. The NEB hears from these stakeholders through direct feedback as well as through evidence submitted at hearings on large infrastructure projects. These considerations all become a part of what the Board considers when it makes decisions in the public interest.

While addressing these societal challenges, the Board continues to streamline regulation for its own processes and for processes involving other federal agencies. Following recommendations received through its Land Matters Consultation Initiative, the NEB is addressing abandonment, clarification of land owner rights and interests, and company commitment to public engagement in proposed energy infrastructure development. The NEB is supporting the strategic and responsible development of the emerging energy sector in the North and offshore areas by working proactively with other government departments and stakeholders.

The NEB continues to support regulatory streamlining by providing technical and regulatory expertise to the Government of Canada's Major Projects Management Office. Related endeavors include the pursuit of substitution1 under the CEA Act, implementing participant funding to support an effective and inclusive public hearing process for major facilities projects, and ensuring that the NEB's regulatory and environmental review process can be relied upon by the Crown to the extent possible in meeting its duty to consult with Aboriginal groups.

Expenditure Profile

Parliament determines the NEB's overall allocation and oversees the Board's spending. The Board recovers approximately 90 percent of its costs from regulated industry. The Board's financial statements, anticipated expenditures and performance results are presented to the NEB's Cost Recovery Liaison Committee, made up of industry's major associations and companies, at regularly scheduled meetings. The NEB's work in the North and non-accord frontier areas under the COGO and CPR Acts is not cost-recovered.

In 2007, the NEB received temporary additional funding through Treasury Board to address increased industry activity for 2007 – 2010. Due to a sustained and continued requirement for resources to meet workload demand, the NEB has determined these resources will be required on a continuing basis and will present a submission to this effect to Treasury Board in 2010.

In 2009, the NEB assumed jurisdiction over the TransCanada Alberta System (NOVA Gas Transmission Ltd). In April 2009, the NEB received approval from Treasury Board for an increase to its ongoing reference level and its cost recovery process to allow the additional funds required to provide regulatory oversight for the system as well as to enhance public participation and aboriginal engagement programs.

The NEB has identified the need to preserve and make accessible data related to its mandate under the COGO and CPR Acts for oil and gas exploration and production in Canada's North and non-accord frontier areas2. The NEB is the sole source of historical well drilling, geophysical, geological, and environmental reports and data sets for these frontier areas. The historical paper and Mylar holdings, some of which date from 1920, are growing increasingly fragile and are difficult to access by interested parties. The data contained within these holdings is fundamental to ongoing and future oil and gas investment in the north. In 2010, the NEB will be seeking financial support from the Government of Canada to transfer these holdings into electronic format, thereby making the information readily accessible via the Internet.

In 2009, the NEB conducted an in-depth Strategic Review of its spending to ensure Canadians receive highly effective programs and services.

The current federal capacity funding for the Mackenzie Gas Project will expire at the end of fiscal 2009-2010. The NEB is participating in the Mackenzie Gas Project Office's review of priorities and funding requirements.

Spending Trend

(million $)	Forecast Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012	Planned Spending 2012-2013
Energy Regulation	29.24	23.9	22.9	21.4
Energy Information	4.96	4.0	3.8	3.6
Internal Services	30.20	24.6	23.7	22.2
Total Planned Spending	64.4	52.5	50.4	47.2

Fiscal Year	Actual			Forecast	Planned
	2006-2007	2007-2008	2008-2009	2009-2010	2010-2011	2011-2012	2012-2013
Spending	44.5	43.8	50.4	64.4	52.5	50.4	47.2

Notes:

FY 2008-2009: Collective Agreement signed including special allowances

FY 2009-2010: Includes additional $9.5M / 56 FTEs approved by TB in 2009 Includes $504K for MGP - MC4

FY 2010-2011: Includes additional $8.0M / 56 FTEs approved by TB in 2009 $6.9 M / 40 FTEs approved by TB in 2007 expires 31 March 2010

FY 2011-2013:Collective agreement to expire November 2011
- Half year of special allowances in 2011-2012
- No special allowances currently planned for 2012-2013

Voted and Statuory Items

Vote # or Statutory Item	Truncated Vote or Statutory Wording	2009-2010 Main Estimates (million $)	2010-2011 Main Estimates (million $)
30	Program Expenditures	39.4	46.2
(S)	Contributions to Employee Benefit Plans	5.0	6.3
Total	44.4	52.5

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