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2012-13
Report on Plans and Priorities

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

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Table of Contents

Message from the Chair and CEO

Section I: Organizational Overview

• Raison d’être
• Responsibilities
• Strategic Outcome and Program Activity Architecture (PAA)
• Organizational Priorities
• Risk Analysis
• Planning Summary
• Expenditure Profile
• Estimates by Vote

Section II: Analysis of Program Activities by Strategic Outcome

• Strategic Outcome
  • Program Activity: Energy Regulation
    • Planning Highlights
  • Program Activity: Energy Information
    • Planning Highlights
  • Program Activity: Internal Services
    • Planning Highlights

Section III: Supplementary Information

• Financial Highlights
• Future-Oriented Financial Statements
• List of Supplementary Information Tables

Section IV: Other Items of Interest

• Organizational Contact Information

Message from the Chair and CEO

I am pleased to present this 2012-13 Report on Plans and Priorities for the National Energy Board (NEB or Board). As Canada’s federal energy regulator, it is part of our responsibility to decide if proposed energy infrastructure projects are in the public interest. The public interest is inclusive of all Canadians and refers to a balance of economic, environmental and social considerations that changes as society’s values and preferences evolve over time.

Through our public hearing process on specific projects, we have the opportunity to hear directly from Canadians about what matters to them. By engaging Canadians who are affected by a proposed energy project through our hearing process and other public forums, we can stay focused on what matters most to them: public and worker safety, security, environmental protection and economic impacts. In the coming year, we expect to see a record number of applications for energy projects. We will continue to perform our regulatory responsibilities in a diligent and timely manner.

Along with a shared commitment to actively listening with open minds, our Board Members and our staff are guided by the principles of natural justice and procedural fairness. Board Members, as decision makers, must be impartial and make decisions based on the evidence that is presented. As an independent Board, we take these principles very seriously.

Further, we will continue to ensure we have a clear and robust regulatory framework and exercise oversight of the facilities and activities we regulate—from project planning and public consultation, to dealing with applications and, when projects are approved, their construction, operation and abandonment. That oversight also extends to the tolls and tariffs pipelines may charge. In so doing, we realize our vision of being active and effective in Canada’s pursuit of a sustainable energy future.

Section I: Organizational Overview

Raison d’être

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 interprovincial power lines; and
• Imports of natural gas and exports of crude oil, natural gas liquids, natural gas, refined petroleum products 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 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 Bay of Fundy, and onshore Sable Island.

The NEB conducts environmental assessments (EA) during its review of applications for projects under its jurisdiction. For certain projects, an EA is also required by federal legislation, such as the Canadian Environmental Assessment Act, the Mackenzie Valley Resource Management Act, the Inuvialuit Final Agreement or the Nunavut Land Claims Agreement. 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 and Program Activity Architecture (PAA)

The diagram below illustrates the NEB’s strategic outcome and program activity architecture. The Board’s program activities and program sub-activities all contribute to achieving the strategic outcome.

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The NEB made minor refinements to its PAA and the supporting performance measurement framework, effective 1 April 2012. The revised strategic outcome and program descriptions focus more clearly on core responsibilities, and the strengthened performance measurement indicators will improve the Board’s ability to measure and monitor results achieved for Canadians.

Organizational Priorities

The following organizational priorities will be the focus of the Board’s attention and resources during this reporting period. These priorities and the associated plans are aimed at continuing to deliver on the Board’s strategic outcome.

Priority	Type*	Strategic Outcome and/or Program Activity(ies)
Continual improvement of safety and environmental outcomes.	New	Energy Regulation
Description
Why is this a priority? Safety and environmental protection are of paramount importance to the Board. As an independent federal regulator, the Board promotes safety and security, environmental protection and economic efficiency in the Canadian public interest within the mandate set by the Parliament of Canada. Plans for meeting the priority Continue implementing the Action Plan on Safety and Environmental Protection to further improve results in four pillars of safety and environmental protection: worker safety, integrity of installations, damage prevention, and emergency preparedness and response. Collect new leading performance measures from NEB-regulated pipeline companies in addition to those currently gathered through incident reporting requirements in the Onshore Pipeline Regulations, 1999. This performance information will enhance NEB risk-modeling for compliance verification planning, and provide industry with information to improve performance on a company-by-company basis.
* Type is defined as follows: previously committed to – committed to in the first or second fiscal year prior to the subject year of the report; ongoing – committed to at least three fiscal years prior to the subject year of the report; and new – newly committed to in the reporting year of the RPP or DPR.

Priority	Type	Strategic Outcome and/or Program Activity(ies)
A robust regulatory framework for the North.	New	Energy Regulation
Description
Why is this a priority? The NEB is the federal body responsible for regulating oil and gas exploration and production activities on frontier lands not otherwise regulated under joint federal/provincial accords. In 2011, the NEB conducted a comprehensive review of the regulatory framework for Arctic offshore drilling, which resulted in the clarification of filing requirements for offshore drilling in the Canadian Arctic. A clear and comprehensive regulatory framework, with supporting processes and tools, is essential for achieving the Board’s strategic outcome and supporting the Government of Canada’s priorities in Canada’s North. Plans for meeting the priority Continue engagement with northern communities and organizations. Develop a Drilling and Production Regulatory Framework.

Priority	Type	Strategic Outcome and/or Program Activity(ies)
A flexible and efficient organization able to meet new and ongoing priorities.	New	Internal Services Energy Regulation
Description
Why is this a priority? A nimble organization is required to continually manage the achievement of the Board’s strategic outcome and priorities in an effective and efficient manner. An increase in industry activity is resulting in unprecedented demand on NEB services. Plans for meeting the priority Strengthen the Board’s integrated planning process to better link financial and human resource allocations to activities and outcomes. Strengthen the NEB’s risk management processes and its integration with strategic planning. Assess and address current and emerging resource needs through the Board’s Regulatory Resourcing Framework. Implement new ways of doing business that strengthen processes and streamline work–e.g., Land Matters Group.

Risk Analysis

In 2011, the NEB regulated approximately 71,000 kilometres of pipelines and 1,400 kilometres of power lines across Canada. These pipelines shipped approximately $103 billion¹ worth of crude oil, petroleum products, natural gas liquids and natural gas to Canadian and export customers at an estimated transportation cost of $6.1 billion. NEB-regulated international power lines transmitted approximately $2.5 billion of electricity into and out of Canada.

The NEB’s responsibilities are not only shaped by emerging energy trends,² but also by the proactive consideration of safety, environmental, societal and economic trends that may influence the Board’s ability to carry out its responsibilities in the Canadian public interest. Within this climate of constant change, the NEB faces a range of risks to achieving its mandate. Some of the sources and drivers of risk are internal (e.g., capacity to efficiently and effectively achieve its strategic outcome during a period of high industry activity), while other sources of risks and drivers are external (e.g., global events and incidents such as the 2010 oil spill in the United States’ Gulf Coast). This changing landscape strongly influences the NEB’s priorities, performance and service delivery.

To continually improve decision-making and facilitate strong management practices in this environment, the NEB integrates risk management in all functions across the organization. This integration occurs strategically and operationally. The key corporate-wide strategic risks facing the Board are listed below. All five risks have the potential to affect the achievement of the NEB’s strategic outcome and expected results at the program activity level.

Resource Constraints: There is a risk that the volume of applications and demand on programs will be higher than expected. If not adequately resourced, the quality of program delivery could be affected.

In response, the NEB will monitor activity levels and ensure resource planning is strategically managed. Resource constraints will be communicated to the Treasury Board Secretariat so that funding levels continue to be appropriate to carry out its mandate.

Loss of reputation as a regulator: There is a risk that the Board will be unable to maintain public confidence if its actions are not considered expert, efficient, effective and neutral.

The Board will continue to issue decisions that are responsive, transparent, independent and evidence-based. Data management processes will be strengthened to ensure regulatory compliance remains robust.

Changes in expectations from Parliamentarians and the public: There is a risk that the public interest may change rapidly and the Board may not adapt to that change quickly enough. The public interest is inclusive of all Canadians and refers to a balance of economic, environmental and social considerations that changes as a society’s values and preferences evolve over time.

The Board will monitor trends via reports, media and political debates, as well as engage stakeholders to ensure their views are understood.

Inability to recruit and retain staff: There is a risk that the NEB will be unable to compete with industry and other employers to attract and retain the skilled staff required to deliver its mandate.

The Board will continue to implement its People Strategy as well as other human resources initiatives that promote strong management practices, strategic recruitment, investment in people and effective work-life balance principles.

Inability to deliver effective internal services: There is a risk that an ineffective alignment of the Board’s internal services and regulatory programs will impact the NEB’s ability to proactively manage program delivery and internal and external challenges.

In response, the Board will continue to strengthen internal/administrative functions such as integrated planning.

Planning Summary

Financial Resources ($ millions)

2012-13	2013-14	2014-15
62.5	56.9	56.9

Human Resources (Full Time Equivalent - FTE)

2012-13	2013-14	2014-15
393.6	393.6	393.6

Strategic Outcome: Pipelines, power lines, energy development and energy trade are regulated in the Canadian public interest.

Performance Indicators	Targets
Number of pipeline failures on NEB-regulated pipelines resulting in the release of liquid or gas.	Zero
Number of fatalities related to the construction and operation of NEB-regulated facilities.	Zero
Canadian prices for oil and gas are in line with continental prices.	The price that Canadians pay for oil and gas is similar to export prices, based on comparison of relative prices.

Planning Summary Table
($ millions)

Program Activity	Forecast Spending 2011-12	Planned Spending			Alignment to Government of Canada Outcomes
		2012-13	2013-14	2014-15
Energy Regulation	32.9	35.6	31.7	31.7	Strong Economic Growth
Energy Information	7.6	6.7	6.5	6.5	Strong Economic Growth
Total Planned Spending		42.3	38.2	38.2

Planning Summary Table
($ millions)

Program Activity	Forecast Spending 2011-12	Planned Spending
		2012-13	2013-14	2014-15
Internal Services	22.8	20.2	18.7	18.7
Total Planned Spending		20.2	18.7	18.7

Expenditure Profile

The NEB is funded through parliamentary appropriations. The Government of Canada recovers approximately 90 percent 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 expenditure increases until 2011-12, after which a gradual decrease in planned spending is expected.

In 2009-10 the spending increase was primarily due to the Board’s decision in February 2009 to transfer jurisdiction of TransCanada PipeLine Limited’s NOVA Gas Transmission Ltd. (NGTL) system to the NEB. Funding was received for the additional FTEs required as a result of this increased regulatory responsibility. These FTE positions were partially filled in 2009-10.

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In 2010-11 and 2011-12, 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. As well, spending increased due to new funds received for the Arctic Review initiative. Spending peaked in 2011-12, with an Operating Budget Carry-Forward of $2.3 million from 2010-11 and $1.6 million for the Arctic Review.

Moving into 2012-13 and 2013-14, planned spending is anticipated to decrease. The overall reduction in allocation and spending is due partly to the collective bargaining process. The NEB did not receive up-front funding to continue special allowances when the collective agreement expired in October 2011. Special allowance funding is calculated and provided as part of the in-year process of Supplementary Estimates and therefore is not included in the forecast for planned spending. Any future provisions for special allowances are subject to a collective bargaining process. However, this overall decrease in planned spending will be partially offset in 2012-13 by increased costs for the Participant Funding Program, which will receive an additional $3.0 million ($4.5 million in total) due to a projected high hearing workload. In 2013-14 and 2014-15, the Participant Funding Program will revert back to its baseline funding level of $1.5 million.

Estimates by Vote

For information on the NEB’s organizational appropriations, please see the 2012-13 Main Estimates publication.³

Section II - Analysis of Program Activities by Strategic Outcome

Strategic Outcome

The Board has one strategic outcome: Pipelines, power lines, energy development and energy trade are regulated in the Canadian public interest. The strategic outcome contributes to the safety of Canadians, the protection of the environment and efficient energy markets. To support this outcome, the Board has two program activities: Energy Regulation and Energy Information. This section describes the targets for each program, and performance indicators, plans and activities that will contribute to meeting the expected results. Information is also provided on the financial and human resources that will be dedicated to each program area.

Program Activity: Energy Regulation

This program activity enables Canadian energy infrastructure to be appropriately developed and managed throughout its lifecycle. This program also allows for the appropriate exploration and development of oil and gas in frontier and offshore areas.

The authority for this program is derived from the National Energy Board Act, the Canada Oil and Gas Operations Act, the Canada Petroleum Resources Act, the Canada Labour Code and other associated regulations and guidelines. As an independent regulatory tribunal, the NEB examines and makes decisions on public interest considerations related to safety and security, environmental protection, economic efficiency and the rights and interests of those affected by NEB-regulated facilities. Energy regulation provides Canadians with safe, reliable and efficient energy supply.

The Energy Regulation Program has two program sub-activities:

• Energy Regulation Development: This sub-activity provides the energy sector and affected stakeholders with the regulatory expectations required for the development and operation of energy infrastructure and for oil and gas exploration and development activities in frontier and offshore areas. The NEB develops and communicates regulations, guidance materials and related processes to ensure its regulatory expectations are clear and useful.
  
  
• Energy Regulation Implementation, Monitoring and Enforcement: Through this subactivity, the NEB efficiently makes informed decisions on issues and applications related to energy development, energy infrastructure, energy transportation, energy trade and related activities. The Board actively involves those interested in or affected by its regulatory decisions through public hearings and other engagement activities.
  
  Through risk based compliance verification activities, the Board monitors and enforces regulated entities’ compliance with regulatory requirements. The NEB also oversees the safe, secure and economically efficient construction and operation of energy infrastructure. Through monitoring and enforcement, the NEB holds regulated entities accountable for results in the public interest.

Financial Resources ($ millions)

2012-13	2013-14	2014-15
35.6	31.7	31.7

Human Resources (FTEs)

2012-13	2013-14	2014-15
224.4	224.4	224.4

Program Activity Expected Results	Performance Indicators	Targets
Regulated activities are conducted in accordance with regulatory requirements.	Percent of major applications filed which are found to be deficient.	Less than or equal to 5% of major applications filed are found to be deficient, and are sent back to the applicant for re-submission.
	Percent of findings of non-compliance that are repeat findings.	Zero
Clear and comprehensive regulatory framework.	Level of stakeholder satisfaction.	Greater than or equal to 80% of stakeholders surveyed are satisfied with the regulatory framework.
Fair, transparent and efficient application assessment.	Stakeholder satisfaction based on post-decision feedback.	Greater than or equal to 80% satisfaction of stakeholders surveyed.
	Percent of successful judicial appeals related to fairness or legal principles.	Zero
Regulated companies are held accountable for results in the Canadian public interest.	Percent of planned high-risk compliance activities completed.*	100%
	Degree to which compliance-related information is publicly accessible per the Action Plan on Safety and Environmental Protection.	100%
* The NEB’s risk informed approach to compliance activities may result in adjustments to the plan through the year.

Planning Highlights

In support of a clear and comprehensive regulatory framework, the NEB will:

• Develop guidance, partnerships and awareness activities to promote working safely around pipelines.
• Implement the Action Plan on Safety and Environmental Protection.
• Engage citizens, communities and Environmental Non-Governmental Organizations to identify how NEB regulatory processes can improve environmental outcomes.
• Strengthen relationships with northern communities and organizations such that the NEB remains aware of the interests of residents.
• Develop a Drilling and Production Regulatory Framework.
• Maintain and develop strategic relationships with other regulators.

In support of fair, transparent and efficient application assessments, the NEB will:

• Implement ongoing Filing Manual amendments.
• Implement efficiencies in processing applications, including hearing processes, to ensure service standards are met by:
  • Tailoring procedural steps to align with project requirements, as appropriate.
  • Enhancing online processes to increase efficiency of routine import and export applications through the Commodities Tracking System.
• Develop effective working relationships through the Land Matters Group so that concerns, views and opportunities related to land matters can be addressed collaboratively.

In support of holding regulated companies accountable for results in the Canadian public interest, the NEB will:

• Provide industry with information to improve performance on a company-by-company basis.
• Continue to provide public access to information about NEB programs and the performance of regulated companies on safety and environmental protection.
• Clarify management system requirements under the NEB Onshore Pipeline Regulations, 1999.
  • Support systematic approaches to managing and reducing risks related to safety and environmental protection.
  • Hold companies accountable for the effectiveness of their management systems.

The above activities support the achievement of the expected result for the Energy Regulation Program: regulated activities are conducted in accordance with regulatory requirements.

Program Activity: Energy Information

Under this program activity, the supply, demand, production, development, transmission and trade of energy are analyzed to ensure the requirements of Canadians are appropriately met. Advice is provided on energy issues of interest to Parliament. The Board uses energy information to inform its regulatory decisions and to produce publicly-available assessments of energy trends, events and issues which may affect Canadian energy markets and the supply and demand for energy. The authority for this program is derived from the National Energy Board Act.

Financial Resources ($ millions)

2012-13	2013-14	2014-15
6.7	6.5	6.5

Human Resources (FTEs)

2012-13	2013-14	2014-15
51.2	51.2	51.2

Program Activity Expected Results	Performance Indicators	Targets
Canadians benefit from energy related information.	Feedback from internal and external clients on Energy Information Program products via questionnaires after workshops, comment cards with publications, interviews with clients.	Greater than or equal to 80% of feedback from clients indicates they find Energy Information Program products useful and relevant.

Planning Highlights

Due to an unprecedented increase in industry applications and safety and environmental protection workload, a significant portion of the Energy Information Program will be postponed. Resources will be reassigned to support safety, application and hearing processes. This will result in the Board suspending the production of many energy information products in 2012-13. The NEB will continue to monitor energy market development and trends in support of its regulatory program and post this information on its website.

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.

Financial Resources ($ millions)

2012-13	2013-14	2014-15
20.2	18.7	18.7

Human Resources (FTEs)

2012-13	2013-14	2014-15
118.0	118.0	118.0

Planning Highlights

To ensure the NEB has the capacity to effectively deliver its mandate, the Board will:

• Promote good management practices by implementing the 2012-15 People Strategy and the Regulatory Resourcing Framework.
• Strengthen the Board’s integrated planning process to better link financial and human resources allocations to activities and outcomes.
• Strengthen the Board’s risk management processes and its integration with strategic planning.
• Manage the lease renewal or relocation of the NEB’s Calgary offices in 2013 in a manner that causes the least disruption for NEB clients and staff.

Section III - Supplementary Information

Financial Highlights

Future-Oriented Condensed Statement of Operations
For the Year (ended March 31)
($ millions)

	$ Change	Future-Oriented 2012-13	Future-Oriented 2011-12
Total Expenses	0.4	72.0	71.6
Total Revenues	(0.2)	65.2	65.4
Net Cost of Operations	(0.6)	6.8	6.2

Condensed Statement of Financial Position
For the Year (ended March 31)
($ millions)

	$ Change	Future-Oriented 2012-13	Future-Oriented 2011-12
Total assets	(5.4)	39.7	45.1
Total liabilities	(4.6)	27.9	32.5
Equity	(0.8)	11.8	12.6
Total	(5.4)	39.7	45.1

Future-Oriented Financial Statements

These future-oriented financial highlights are prepared on an accrual basis to strengthen accountability and to improve transparency and financial management. The amounts presented above differ from the amounts presented in the tables in Section I and II of this document, which are completed on a cash basis.

The Future-oriented Statement of Operations and associated notes can be found on the NEB’s website.⁴

List of Supplementary Information Tables

The following electronic supplementary information tables can be found on the Treasury Board of Canada Secretariat's web site.⁵

• Greening Government Operations
• Sources of Non-Respendable Revenue; and
• Upcoming Internal Audits and Evaluations over the next three fiscal years

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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 Service Standards

As part of its measurement plan, the NEB has established service standards that identify specific delivery targets for key services. Meeting service standard targets consistently and with quality results reflects the NEB’s commitment to efficient and effective regulatory processes.

More information on the NEB service standards is available on the NEB’s website.⁶

NEB Strategic Plan

The NEB’s three-year Strategic Plan is available on the NEB’s website.⁷

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Footnotes

1 The value is derived from annual throughputs and the weighted average yearly commodity price.

2 Additional energy information is available on the NEB’s website under “Energy Information. http://www.neb-one.gc.ca

3 http://www.tbs-sct.gc.ca/est-pre/20122013/p2-eng.asp

4 http://www.neb-one.gc.ca/clf-nsi/rpblctn/rprt/plnprrt/20122013/fnnclsttmnt-eng.html

5 http://www.tbs-sct.gc.ca/rpp/2012-2013/index-eng.asp

6 Service standards are available on the NEB’s website under “Who we are and our governance.” http://www.neb-one.gc.ca

7 The NEB Strategic Plan is available on the NEB’s website under “Who we are and our governance.”http://www.neb-one.gc.ca