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Section I Overview

Message from the Chair

Canada has the gift of abundant natural resources and Canadians have the opportunity to make important choices that will shape our energy future. The National Energy Board’s (NEB or Board) Report on Plans and Priorities for 2008-2009 shows that the NEB is strongly positioned to leverage opportunities for the benefit of Canadians.

Canadians depend on a safe, reliable and efficient energy supply. The NEB, through its regulatory oversight, plays a critical role in ensuring that this is accomplished by infrastructure which operates safely and with minimal environmental impact. In the current environment of increasing global energy demand for safe and secure supplies of energy and continuing high energy prices, the NEB’s role as Canada’s national energy regulator, within the mandate set by Parliament, is more significant than ever.

The NEB’s first priority is to deliver solidly on our mandate by conducting efficient and effective project reviews and implementing regulatory oversight that meets our high standards. The NEB verifies that companies are effectively managing the safety, security, environmental, economic, socio-economic and lands risks throughout the lifecycle of regulated facilities. Our staff provides regulatory and technical expertise to ensure that Board Members have the information they need to review major project applications and make decisions in the public interest. The NEB also provides industry, policy makers and the public with objective, independent and timely information on Canada’s energy markets to assist in decision making for energy infrastructure and markets.

Our other priorities are to continue to process applications on a timely basis, work with our partners to improve interagency cooperation, and to ensure that pipelines continue to be operated safely. Our overall strategy is to implement continual improvements to our processes. These improvements happen every day through the people who work at the NEB and their commitment to excellence and to serving the Canadian public interest.

As the Board continues to work hard to balance and integrate public safety, environmental interests and economic efficiency in arriving at decisions that are in the Canadian public interest, I am confident that Canadians will continue to benefit from the tremendous endowment of energy resources they possess.

Gaétan Caron
Chair and CEO

Management Representation Statement

I submit for tabling in Parliament, the 2008 – 2009 Report on Plans and Priorities (RPP) for the National Energy Board.

This document has been prepared based on the reporting principles contained in the Guide for the Preparation of Part III of the 2008 – 2009 Estimates: Report on Plans and Priorities and Departmental Performance Reports:

• It adheres to the specific reporting requirements outlined in the Treasury Board Secretariat guidance;
• It is based on the NEB’s approved Strategic Outcome and Program Activity Architecture that were approved by Treasury Board;
• It presents consistent, comprehensive, balanced and reliable information;
• It provides a basis of accountability for the results achieved with the resources and authorities entrusted to it; and
• It reports finances based on approved planned spending numbers from the Treasury Board Secretariat.

Gaétan Caron
Chair and CEO

 

NEB Mandate

The NEB’s corporate purpose is to promote safety and security, environmental protection and efficient energy infrastructure and markets in the Canadian public interest1 within the mandate set by Parliament in the regulation of pipelines, energy development and trade.

Summary Information

The NEB is an independent federal agency that regulates several aspects of Canada’s energy industry. Its purpose is to promote safety and security, environmental protection and economic efficiency in the Canadian public interest within the mandate set by Parliament in the regulation of pipelines, energy development and trade. The NEB regulates the construction and operation of pipelines that cross international or provincial borders, tolls and tariffs on these pipelines, international power lines and designated interprovincial power lines. The NEB also regulates natural gas imports and exports, oil and natural gas liquid exports, electricity exports, and some oil and gas exploration on frontier lands, particularly in Canada’s North and certain offshore areas. Finally, the NEB provides Canadians with information about Canadian energy markets.

The main functions of the NEB are established 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, 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, established in 1959, is an independent regulatory tribunal guided by the principles of natural justice and procedural fairness. The NEB reports to Parliament through the Minister of Natural Resources. The Board is a court of record and has certain powers of a superior court of record including those for attendance, swearing and examination of witnesses, the production and inspection of documents, the enforcement of its orders and the inspection of property. The Board’s regulatory decisions and the reasons for them are issued as public documents.

The NEB’s regulatory responsibilities for public safety, security and protection of the environment are set out in the NEB Act and the COGO Act. The NEB is also required to 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 enforcement of terms and conditions during and after construction; and monitoring and regulation of ongoing operations, including deactivation and abandonment. Through the Public Safety Act, 2002 (Bill C-7) the NEB has legislative authority for the security of pipelines and international power lines.

The Board’s mandate includes the provision of expert technical advice to the Canada-Newfoundland Offshore Petroleum Board, the Canada-Nova Scotia Offshore Petroleum Board, Natural Resources Canada (NRCan), and Indian and Northern Affairs Canada (INAC). Since devolution, the Board has a service agreement with the Yukon to provide technical advice. The Board may, on its own initiative, hold inquiries and conduct studies on specific energy matters as well as prepare reports for Parliament, the federal government and the general public. The NEB Act requires that the Board keep under review matters relating to all aspects of energy supply, production, development and trade that fall within the jurisdiction of the federal government. In addition, the Board provides advice and carries out studies and reports at the request of the Minister of Natural Resources.

NEB Vision The NEB is an active, effective and knowledgeable partner in the responsible development of Canada’s energy sector for the benefit of Canadians. NEB Values At the NEB we strive for excellence in all that we do. Excellence at the NEB is driven by organizational and personal commitment to three corporate values: Integrity: We are fair, transparent, and respectful Regulatory Leadership: We are responsive, proactive and innovative Accountability: We support and hold each other accountable to deliver timely, high quality results in the Canadian public interest

The NEB’s vision describes the Board’s direction in applying its mandate in the current environment. The words responsible development reflect the NEB’s belief that the development of infrastructure that is built in a safe, environmentally acceptable and economically efficient manner serves the needs of Canadians. A key role of the regulator is that it must have regard to the potential social and environmental impacts not fully dealt with by markets. The NEB sees itself as a partner with all stakeholders and works with them to ensure that concerns are identified and understood and that the correct balance is achieved among economic, social and environmental factors. To support this approach, the NEB is committed to being active, effective and knowledgeable. This means anticipating and preparing for issues that come before the Board, being results oriented, and having the capacity to deal with the highly complex multi-disciplinary matters surrounding energy regulation.

NEB Planning Process

In order to remain relevant with clear focus on emerging priorities, the Board engages in an annual strategic planning process, resulting in an updated strategic plan. The formal process begins with an analysis of external influences, including societal and economic trends. Then long-range strategic goals are reviewed and clarified, followed by business planning to meet strategic objectives. The business plans are reported on regularly throughout the year and updated as required.

NEB’s Quality Policy

The NEB strives to meet its goals through excellence in execution and continual improvement, facilitated by a Board-wide Quality Management System.

The NEB’s Quality Policy is followed by the entire organization through its Quality Management System.

Summary Information 2008 – 20092

Financial Resources (million $)

2008-2009	2009-2010	2010-2011
47.3	44.3	36.6

Human Resources  (Full-time equivalents)

2008-2009	2009-2010	2010-2011
354.6	336.6	296.6

The NEB’s priorities for 2008 – 2009 are implemented through the NEB’s planned work to meet its five goals. The NEB goals are explained in detail in Section II.

The NEB is a cost-recovered, independent regulatory agency. The NEB Act authorizes the Board to charge those companies it regulates costs attributable to the NEB’s operations in carrying out its related responsibilities. This process is managed through the Cost Recovery Regulations under the NEB Act. The NEB’s financial statements, anticipated expenditures and performance results are presented to the Cost Recovery Liaison Committee, made up of industry’s major associations and companies, at regularly scheduled meetings.

Departmental Priorities

Name	Type
1.  Partnerships for regulatory efficiency and effectiveness	Ongoing
2. Effective engagement for Canadians affected by projects	Ongoing
3. Continuous improvement of regulatory processes	Ongoing
4. Leveraging our strengths to deliver on our mandate	Ongoing

Organizational Information

The Board is structured into five business units, reflecting major areas of responsibility: Applications; Commodities; Operations; Planning, Policy and Coordination; and Integrated Solutions. In addition, the Executive Office includes the specialized services of Legal Services3 and Office of the Secretary’s regulatory services. The reporting structure is outlined in Figure 1.

Program Activities by Strategic Outcome
	Planned Spending (million $)			Priorities 2008-2008
	2008-2009	2009-2010	2010-2011
	38.1	38.1	36.6
Strategic Outcome:	Safety, security, environmental protection and economic benefits through regulation of pipelines, power lines, trade and energy development within NEB jurisdiction.			1. Partnerships for regulatory efficiency and effectiveness 2. Effective engagement for stakeholders affected by projects 3. Continuous improvement of regulatory processes 4. Leveraging our strengths to deliver on our mandate
Program Activity:	Energy Regulation and Advice
Expected Results:	The expected results of the Energy Regulation and Advice activity are expressed in the NEB’s Strategic Plan Goals, as follows: Goal 1. NEB-regulated facilities and activities are safe and secure, and are perceived to be so Goal 2. NEB-regulated facilities are built and operated in a manner that protects the environment and respects the rights of those affected Goal 3. Canadians benefit from efficient energy infrastructure and markets Goal 4. The NEB fufillls its mandate with the benefit of effective public engagement Goal 5. The NEB delivers quality outcomes through innovative leadership and effective support processes
Alignment with Government of canada Outcome: Strong economic growth

Figure 1
NEB Organizational Structure

Departmental Plans and Priorities

Operating Environment

In establishing the priorities for 2008-2009, the NEB considered evolving trends, risks and challenges that might influence how it carries out its responsibilities and delivers results to Canadians. A number of important elements are discussed below.

Economic context

Canadians depend on a safe, reliable and efficient energy supply. The 45,000 kilometres of interprovincial and international pipelines regulated by the NEB are a crucial element in Canada’s transportation and distribution system. These systems include large-diameter, cross-country, natural gas, oil and oil products pipelines, small-diameter pipelines, and commodity pipelines. In 2007, approximately $100 billion worth of products flowed through Canadian pipelines to markets at home and in the U.S. (7 percent of GDP). The cost in 2007 of providing these transportation services is estimated to be around $5 billion through tolls regulated by the NEB, not including fuel costs paid by shippers on natural gas pipelines. This was accomplished by infrastructure that is mostly invisible to consumers and that operates with a low rate of failure and minimal environmental impact.

The international power lines under NEB jurisdiction comprise 1,100 kilometres, representing approximately 0.7 percent of all electric transmission lines in Canada. They account for virtually all the trade in electricity between Canada and the U.S. and provide important reliability benefits on both sides of the border. The value of electricity exports is about $3.2 billion in 2007 and imports amount to approximately $1 billion.

Alberta’s economic growth continues to far outpace the national average based on the forecast investments and production increases in the energy sector. The economic growth, while moderating somewhat in 2007, is still forecast to outperform the rest of Canada and continues to contribute to the labour market and cost of living pressures in Alberta. The Conference Board of Canada indicates that labour shortages are forecast to 2025, and the unemployment rate will be well below the national average (3.5% versus 6.5%), if current trends continue. The labour market will remain tight as companies continue to pursue aggressive recruitment and retention strategies and hire additional staff to meet the growth in production.

Energy market context

World oil prices continued to be high and volatile in 2007. In January, the average price of crude oil was just over $US54, its lowest level of the year. Through the course of the year, prices responded to geopolitical events, significant demand growth led by China and India, refinery outages, tight crude oil inventory levels, as well as greater participation in the oil markets by non-commercial interests. The price of benchmark West Texas Intermediate crude oil reached a record high of $US98.18 on 23 November, and averaged around $US75 for the year. Prices are expected to remain strong and volatile in 2008, with continued growth in emerging economies coupled with ongoing geopolitical risks. A recession in the U.S., however, remains a key risk to crude oil price strength. Looking ahead, crude oil prices are likely to average between $US70-$80 during the next few years.

The Canadian/U.S.dollar exchange rate also appreciated rapidly, moving from $0.85 in January to $1.09 in November, settling near parity by year-end. Since oil and natural gas export prices are denominated in U.S. dollars, this had the effect of lowering revenues received by Canadian producers by nearly 20 percent, thereby somewhat offsetting the increase in prices.

Natural gas prices were not as volatile in 2007, compared with recent years. Following the peaks reached in late 2005 ($US15/MMBtu, NYMEX Henry Hub) in the aftermath of supply disruptions caused by hurricanes in the Gulf of Mexico, prices fell to around $US 4/MMBtu by fall 2006 and stayed in the $US6.00-7.50 dollar range throughout 2007. High storage levels, increased U.S. production, and increased liquified natural gas (LNG) imports into the U.S. combined to offset slightly lower Canadian production levels in the North American market. As well, the absence of any significant weather disruptions to production in the Gulf of Mexico, compared to previous years, further dampened any supply concerns for North America. Over the winter, prices are expected to average in the $US 6.00-8.00/MMBtu range for the 2008 heating season; however, prolonged cold temperatures in the early part of winter could result in price spikes.

Canadian energy consumption has been steadily increasing since 1998, with variations depending on weather and strong prices in 2001. Economic growth and the population continue to increase, driving demand on an upward trend. This helped push the estimated 2006 energy demand above the 2005 level, despite an increase in the energy CPI of 5.1 percent. The energy CPI increased by 9.7 percent from 2004 to 2005; these higher prices moderated demand so that 2005 energy demand was less than 2004. For 2006, the transportation sector has estimated slightly lower demand in 2006 than 2005 with the continued strong oil prices throughout 2006. Note that the oil and gas consumption data used are from actuals, and the other energy sources, including electricity, are estimated. Figure 2 illustrates the composition of Canadian energy demand.

Figure 2
Canadian Energy Demand

In 2007, oil and gas industry activity levels were negatively affected by lower natural gas prices and the impact of a high Canadian dollar. Lower natural gas prices and higher oil prices in 2007 resulted in more oil wells being drilled and substantially fewer gas wells. The exploration and production sector in Canada drilled an estimated 17,600 wells, down 26 percent from the record 23,700 in 2006. Investment in Canadian oil and gas in 2007 is estimated to be $49 billion, similar to the amount in 2006, which was a record in Canada. Upstream drilling activity is expected to decline substantially over the planning period, with a greater emphasis on oil sands and conventional oil, and lesser emphasis on natural gas, than in the recent past. Total wells drilled in Canada in 2008 is forecast to be approximately 14,500.

With increasing production from the oil sands and the development off the coast of Newfoundland, Canada is steadily increasing its oil production. For example, total Canadian production is expected to increase by about 45,000 cubic metres per day between 2007 and 2009, to a level of 523,000 cubic metres per day. Most of this growth is attributable to oil sands production. As oil production has grown, pipeline capacity has become an issue. In 2007, many of the major oil pipeline systems had to occasionally apportion their capacity, thereby limiting flows below market demand.

Canada is the number one exporter of crude oil to the United States and it is expected that Canadian production and exports will continue to grow as production from the oil sands steadily increases over the coming decade. Considerable new investment in the pipeline transportation sector is required to transport increasing production to markets to benefit of consumers, producers and the economy as a whole. Pipeline capacity is expected to be tight over the next two years as pipeline proposals have been approved and are moving into the construction stage while others are still before the regulators.

Consequently, there are numerous proposals to expand or construct new oil pipeline capacity in Canada. Figure 3 illustrates the NEB’s forecast of crude oil production and possible pipeline capacity available to transport crude oil and products from Western Canada on existing and proposed new facilities. It is estimated that the pipeline projects shown here total over $23 billion in spending, and there are a number being proposed which are not shown. Some have been approved; some are currently in proceedings before the Board; and there are some projects under consideration for which applications have not been submitted.

Figure 3
Proposed Oil Pipeline Projects and NEB Forecast of Crude Oil Production

Canadian gas production is expected to decline over the next three years. It is being impacted by the decline in drilling activity as a result of the squeeze between lower prices and increased costs. The impact will affect both conventional and unconventional gas production. Over the longer term, industry is pursuing the development of frontier gas resources in the Mackenzie Delta. The Board has an application before it to build a major pipeline from the Delta along the Mackenzie Valley to Alberta from which gas can access both domestic and export markets. Industry is also looking into maintaining production from offshore Nova Scotia through the enhanced development of currently producing fields and the planned development of the Deep Panuke field. In anticipation of a need for additional energy supplies for the North American market, developers have proposed LNG import terminals at sites located in the Maritimes, Québec and British Columbia.

With new gas-fired generation likely to be needed to help displace the use of existing coal-fired electricity generation in Ontario and increased gas use in oil sands application, significant incremental Canadian requirements for natural gas are expected. While natural gas capacity is generally adequate, new facilities are being proposed to connect new supply sources into the existing system and serve new markets.

Over half of Canadian natural gas production is exported to the U.S. Net export volumes for 2007 are expected to be slightly above 2006 at 90.1 billion cubic metres, despite the slowdown in Canadian gas production. Utilities and other gas buyers have been actively building up gas in storage in preparation for winter. The average price of Canadian gas exports is lower in 2007 than in 2006 because of lower overall natural gas prices in North America. The appreciation in the Canadian dollar will also have some impact on Canadian export revenues. However, the size of that impact is unclear, as Canadian gas exports may be priced in Canadian dollars or U.S. dollars, depending on the location of gas purchase and contracting terms. Overall, it is expected that while net export volumes will be higher than 2006, revenues could be very similar to last year, in the $27 to $30 billion range.

Changing dynamics in markets for Canadian gas include rising Canadian demand for gas-fired power generation, especially in Ontario, and for oil sands production in Alberta. Canadian export markets may also be impacted by new pipelines intended to move gas from the U.S. Rockies to eastern U.S. markets and by growing LNG import volumes into the U.S. As the shape of the industry changes, the Board will be faced with new and innovative proposals. Innovative approaches such as the provision of short notice pipeline services for power generators and the removal of pipeline capacity from gas service for conversion to oil service have come in front of the Board this year and equally complex issues may continue to come before the Board in the future.

For the electric industry, provincial policy makers and regulators across Canada continue to assess the need and invest in new generation and transmission facilities. Investments are required to accommodate rising demand, replacement and refurbishment of existing facilities and potential connections of large remote hydro developments. Stakeholders look to both interprovincial and international interconnections to ensure near-term reliability and ensuring longer term adequacy of supply. While considerable uncertainty surrounds the timing and need for specific projects, it is expected that recent interest in improving cross-border interconnections with the U.S. to benefit parties on both sides of the border will continue in the coming years.

In summary, industry is responding to market needs by developing new large infrastructure projects, including oil pipelines, natural gas pipelines, LNG receiving terminals and power generation and transmission facilities. These projects could bring additional energy supplies to Canadians and contribute to future energy security. The NEB is responsible for reviewing many of these infrastructure projects and ensuring that, when they are found to be in the public interest, they proceed in ways that provide the greatest benefits to Canadians while minimizing any adverse impacts. In this context, there are a number of challenges with the current regulatory system discussed below that require solutions to ensure fair and effective regulatory processes.

NEB Business Environment

Drive for new energy sources and infrastructure

The number of facility applications is increasing for many regulators and the magnitude and need for the supply is driving regulators to be as efficient, clear and predictable as possible. Projects using new technologies and in non-traditional regions are also raising new issues for regulators including addressing unique circumstances around LNG, pipelining in permafrost, change of pipeline use and alternative means to validate the integrity of pipelines.

Impact on applications and hearings

The Board undertakes significant pre-application work related to major facilities applications in order to ensure the responsible and efficient development of energy infrastructure. For major applications, the NEB holds written or oral public hearings where applicants and interested parties can participate. Oral hearings are held at locations where there is a particular interest in the application and which will be most affected by the decision. The number and cost of hearings have increased in recent years due to rising transportation and material costs, and also due to evolving trends of increasing interest from the public in regulatory processes.

Regulatory coordination

Energy infrastructure projects can involve a wide variety of issues underlining the need for reviewing safety, environmental, Aboriginal and socio-economic considerations. Regulatory decision making for infrastructure projects can involve multiple regulators including the NEB, the Canadian Environmental Assessment (CEA) Agency, Fisheries and Oceans Canada, and Environment Canada, multiple jurisdictions (federal, provincial, municipal, Aboriginal) and overlap and duplication of processes. The degree of complexity is magnified in the North where a number of regulatory agencies have been established through devolution, land use settlements and resource management regimes.

This regulatory complexity can result in delays in bringing on new supplies with attendant costs to Canadians. On the other hand, Canadians who are affected by these projects require fair and accessible processes in order to participate effectively. Both project proponents and affected stakeholders are looking for more effective and efficient regulatory processes that will help enable the responsible development of desirable infrastructure on a timely basis.

Another challenge for the Board is in responding to the evolving law on Aboriginal consultation. The Board continues to monitor legal developments in this area and ensures that it has information regarding Aboriginal interests that may be affected by proposed projects before rendering decisions that may affect those interests.

Recently, a number of federal initiatives have been introduced that will address some of the impacts related to regulatory fragmentation. The October 2007 Speech from the Throne conveyed government direction to improve economic, social and environmental outcomes through resource development opportunities and improved federal processes. The government has introduced a number of initiatives reflecting this direction, including a Major Projects Management Office (MPMO) and a Northern Strategy, with a Northern Regulatory Improvement Initiative.

The goal of the MPMO, operated through Natural Resources Canada, is to improve coordination within Canada’s regulatory system by providing industry with a single, efficient point of entry into federal processes while ensuring that projects are built in a safe manner and the environment is protected. Applicants for federal energy projects will be required to file their applications with the MPMO, and it will have the responsibility for coordinating the federal regulatory process.

The Northern Regulatory Improvement Initiative, managed by INAC, is a strategy to improve the current regulatory regime in the North, in order to ensure that regulatory processes across the North are effective and predictable. It will enable the North to develop and benefit from its resources. This initiative is connected to NEB activities underway in the North, including:

• amendments to the COGO Act, to provide the NEB with the authority to regulate pipeline access, tolls and tariffs;
• amendments to the Mackenzie Valley Resource Management Act, to ensure a one window regulatory approach;
• the five year review of the Yukon Environmental and Socio-economic Assessment Act; and
• accelerated development of the Nunavut Land Use Planning and Impact Act.

The NEB is actively supporting these and other regulatory coordination initiatives through partnership opportunities with federal agencies. The common anticipated outcomes of streamlined regulatory processes and an effective regulatory regime address many of the issues that affect the NEB’s working environment.

Increasing public expectations

Growing public involvement in energy infrastructure

Stakeholders are becoming better informed, more knowledgeable and better connected to one another. The public and landowners are becoming more aware of, and more sensitive to, infrastructure projects. This reflects a number of forces including increased focus on personal and landowner interests in part due to changing perceptions of individual rights and interests versus the public good, the increase in the number of facilities on private lands, and the movement of projects into areas which do not traditionally deal with energy infrastructure such as the North and communities with potential LNG terminal sites. This is seen, for example, in a growing number of landowner complaints, intervention in proceedings, and right-of-entry applications.

Greater environmental awareness

Over the past few years there has been a step change in terms of the stronger voice given to environmental concerns. This is most pronounced in the area of climate change impacts but there has also been greater attention focused on other concerns including those surrounding the oil sands, including air, water and land use, greenhouse gases and emissions. With a growing body of science concerning environmental effects, consumers are looking for alternatives to hydrocarbons. More interest in the environment translates into more interest in energy and is increasing debate about energy choices.

Regulatory and technical expertise

The NEB is expected to provide expert regulatory knowledge and oversight for a significant and rapidly developing energy sector. For context, approximately $100 billion of natural gas, natural gas liquids, crude oil, petroleum products and electricity were transported by NEB-regulated pipelines and power lines to Canadian energy users and markets outside of Canada in 2007. The companies that the NEB regulates operate more than 800 surface facilities and maintain approximately 45,000 kilometers of interprovincial and international pipelines and related infrastructure, as well as 1,100 km of international power lines. The industry the NEB regulates provides energy to Canadians across the country and delivers a range of energy products to the U.S. With the requirement for safety, environmental and economic assessments to develop and consider projects in the Canadian public interest, the need for a skilled, knowledgeable workforce is higher than ever.

As an employer, NEB operates in a challenging labour market, with the energy industry actively competing for the same technical skill sets that the NEB requires. The NEB’s annual attrition rate rose from 7 percent in 2003 to 14.5 percent in fiscal 2005-2006, continued high at 10 percent in 2006-2007; and is at 15 percent at mid-year 2007-2008. Over half of these departures were fully trained, experienced employees drawn from the ranks of our professional engineers, inspectors and market analysts. The demand for these professionals is high and will remain so in the foreseeable future. This trend is further impacted by the Canadian demographics of baby boomers departing, the new generation being smaller in number and with different expectations than those they are replacing.

NEB Priorities in 2008 – 2009

Delivering on regulatory mandate

The Board’s key commitment is to meet its mandate through its project review and regulatory oversight processes. This includes handling applications efficiently and ensuring pipelines are safe. The NEB’s focus over the next planning period continues to be to provide the required expert knowledge to review increasingly complex applications and to address an increased hearing load. At the same time, the Board will continue to solidly deliver on its regulatory oversight activities, including conducting audits, safety and security inspections, emergency response activities. The Board also continues to provide energy supply and demand forecasting and assessment to Ministers, stakeholders and general public.

The NEB uses its strategies, as stated in its annually updated Stratigic Plan, as a guide to setting its priorities. For the next planning period, the NEB’s strategies are:

• We seek partnerships for common objectives
• We engage Canadians
• We create and adopt best practices

In order to keep its regulatory framework relevant in light of evolving economic, technical, social and environmental developments, and to be able to provide regulatory leadership that is responsive, proactive and innovative, the NEB is addressing the following priorities over the next planning period.

1.  Partnerships for regulatory efficiency and effectiveness

This priority reflects the NEB’s strategy to seek partnerships for common objectives. The NEB works in partnership with numerous regulatory agencies as well as federal, provincial and territorial government departments in order to meet its mandate. The NEB maintains approximately twenty formal Memorandums of Understanding and agreements with agencies across Canada to enable regulatory oversight and sharing of regulatory expertise. The Board maintains many other working relationships to streamline delivery on common or overlapping mandates. The NEB is now addressing specifically how it interacts with other government department and agencies by proactively seeking partnering opportunities that lead to regulatory efficiency and effectiveness.

Plan to Achieve Priority

In order to successfully fufill its regulatory mandate, the Board will continue to work in partnership with a number of federal agencies, including CEAA, NRCan, INAC and other responsible authorities under the CEA Act. The NEB will work proactively with the Major Projects Management Office (MPMO) to support achievement of the common outcome of regulatory efficiency. The NEB’s work with the MPMO and on project coordination and Aboriginal consultation are likely to require additional resources.

The Board will identify opportunities to work with these partners to have effective processes wherever possible. These include:

• providing technical and administrative support for the MPMO;
• focusing efforts to build partnerships with departments that work directly with the NEB, including the CEA Agency, NRCan, INAC;
• continuing to coordinate environmental assessment processes with the CEA Agency and to implement substitution as opportunities arise;
• partnering with provincial regulatory bodies to streamline regulatory processes and achieve common objectives;
• continuing to work with federal partners to modernize the regulatory framework for the North through amendments to the COGO Act and CPR Act;
• coordinating with the government’s integrated northern strategy through any Board initiatives and activities that occur in that region;
• partnering with the Northwest Territories land and water boards to provide regulatory and technical leadership, share information and best practices, and streamline regulatory processes;
• providing technical advice and regulatory support for updating regulations and related tools for offshore areas, via Memorandum of Understanding with NRCan, INAC, the Canada-Newfoundland Offshore Petroleum Board, the Canada-Nova Scotia Offshore Petroleum Board, and the provinces of Newfoundland and Nova Scotia;
• participating in standards setting bodies to develop and updated related standards, such as through the Canadian Standards Association;
• sharing information and developing compatible regulatory approaches with national regulatory bodies from the U.S. and Mexico; and
• supporting regulatory organizations such as the Canadian Association of Members of Public Utility Tribunals to achieve common regulatory streamlining objectives.

2.  Effective engagement for Canadians affected by projects

This priority reflects the NEB’s strategy to engage Canadians. The increased activity in energy infrastructure development is accompanied by rising public expectations with respect to involvement in the development and related processes. Parties increasingly want to be involved in the Board’s processes because of growing concerns with energy development. Conflicts in land use and access for energy infrastructure development are occurring more often, which affects infrastructure development and the efficiency of Board processes. For the NEB, it is a priority to address these expectations by identifying opportunities that will improve outcomes for all involved.

Plan to Achieve Priority

Increasing engagement options for stakeholders affected by projects

The NEB is responding to increased landowner concerns about facility applications and increased public concerns related to environment and safety matters associated with facility applications by ensuring that stakeholders and the public affected by major projects are effectively engaged. Resources are being allocated to ensure that interested parties can participate in the project review process through enhanced pre-application and hearing processes. Features of increased engagement efforts include:

• information sessions and town hall meetings for the public in the area affected by proposed infrastructure development;
• developing a variety of methods for interacting with stakeholders, including workshops and non-hearing approaches;
• accommodation of Aboriginal participation via hearing location;
• gathering information on and respecting local community protocol;
• inclusion of cultural practices in related processes;
• correspondence and information bulletins for stakeholders; and
• proactive news releases, backgrounders, advisories for media.

As noted above, resources are being allocated to hold additional hearings in locations near the affected stakeholders. This increases hearing costs but enables landowners and other interested parties unable to travel to the location of the Board in Calgary to participate in both pre-application and hearing processes.

Increased focus on regulatory program related to lands

With increasing landowner concerns about the impacts of energy infrastructure development and about their relationship with pipeline companies and the Board, the NEB is working to clarify regulatory expectations for land matters. First, the NEB will implement and initiative to review stakeholder concerns in a number of key areas related to land matters, called the Land Matters Consultation Initiative (LMCI). This includes receiving input on regulated companies’ landowner consultation programs, project notification, processes for acquiring access to rights-of-way, vehicle crossings of rights-of-way, and the physical and financial aspects of abandonment. Next, the Board will implement changes recommended through LMCI in the regulatory framework where applicable. This includes clearly defining expectations of companies, verifying compliance, and measuring and reporting on NEB and industry performance.

At the same time, the NEB will work with landowners to clarify and communicate project review engagement processes. For example, the suite of communication tools used by the NEB to engage landowners will be expanded to include information on what landowners can expect from a company applying to develop a pipeline or facility on their land, and how they can be involved in regulatory processes related to infrastructure development. The initiative will use a variety of opportunities for proactive communication with landowners, including presentations at public venues and community events. The NEB will also focus on communicating with landowners about how the NEB verifies safety, security and the protection of the environment.

3. Continuous improvement of regulatory processes

This priority reflects the NEB’s strategy to create and adopt best practices. The NEB is committed to providing efficient and effective regulatory processes delivered in a transparent, accountable and responsive manner. As a result, the Board’s priority is to continually improve its regulatory processes, and its active Quality Management System is key to this. These improvements require an integrated approach that fully utilizes the NEB’s regulatory tools.

Plan to Achieve Priority

Risk-based lifecycle approach

The NEB is working to fully implement a risk-based lifecycle approach as a component of its goal oriented approach to regulation. The NEB’s goal oriented approach to regulation means that regulated companies are accountable to ensure that their performance meets the NEB’s expectations, which are expressed through the NEB’s Regulations, Guidance Notes and filing requirements. The risk-based lifecycle component to this approach incorporates the principles of management systems to each phase of a facility’s lifecycle. This approach enables the NEB’s regulatory oversight to be based on the company’s past performance and is being implemented through tools such as management system reviews, inspections, investigations and audits. A risk-based lifecycle approach also enables the NEB to adjust its regulatory processes to fit the scope and risk of facility applications filed before the Board. For example, companies with a good compliance record that are proposing to build low risk facilities will be able to expect a quicker approval process.

Elements requiring development over the next planning period include completing an information management system to integrate current compliance data with additional data to support the analytical processes required to conduct compliance benchmarking and trending; further improvement of existing compliance verification processes to enable the shift to risk-based compliance oversight; and enhanced integration of assessment findings and recommendations with operational compliance verification programs. In addition, the program areas of lands, socio-economics and tolling will be added to the NEB’s current suite of risk-based regulatory oversight programs, which includes safety, security, integrity, environmental protection and emergency management.

Regulatory program for protecting the environment

Over the next planning period, the Board will focus on ensuring that its regulatory program for environmental protection is efficient, effective, and clearly communicated. The Board’s oversight for ensuring that facilities are planned, built and operated in a manner that protects the environment applies to the full lifecycle of federally regulated energy infrastructure. To improve the efficiency and effectiveness of environmental assessment, the NEB will continue to focus on coordination with its environmental assessment partners, including federal, provincial and territorial authorities. To ensure that appropriate environmental outcomes are incorporated into project design and processes, the Board will continue to communicate expectations to industry about early engagement with stakeholders to ensure that their knowledge and expectations are incorporated. In conjunction with this, the NEB will proactively communicate with industry and stakeholders, so that the Board’s expectations and performance can be seen at all phases of the energy infrastructure lifecycle.

4.  Leveraging our strengths to deliver on our mandate

To meet the economic reality of a highly competitive employment market, the NEB is leveraging its strengths as an employer who provides interesting and challenging work of benefit to Canadians. Energy is an important sector of the economy that affects everyone in Canada and has international impacts as well. When making a decision on the responsible development of Canada’s energy sector, the NEB balances the needs of many stakeholders while ensuring safety and security, environmental protection and economic efficiency. The employment opportunities created through this process are challenging and rewarding. The NEB is updating its strategy that leverages our strengths as an employer to ensure that we have the appropriate staff where needed in a timely way and that generational differences are recognized.

Plan to Achieve Priority

Recruitment and retention

The NEB has many features that it offers as an employer and it is building on these strengths to attract and retain staff. Highlights include:

• the NEB, as a knowledge-based organization, actively supports professional development and career progression;
• providing a respectful workplace where creativity is encouraged;
• opportunities to move laterally through the organization to gain a wide variety of experience;
• an effective performance management framework;
• temporary exchanges with private industry and placements with other government agencies to broaden career experience;
• workplace flexible employment policies, including a work-life balance approach which honours the need for achieving balance between professional and personal life;
• recognition of the differing expectations of different generations; and
• the opportunity to work in a small well-networked organization with national and international impact.

The NEB is building on these strengths to implement a proactive recruitment and retention strategy. This includes defining our culture for recruitment purposes; an updated rewards and recognition program; flexible staffing mechanisms; flexible work arrangements including flex-time, teleworking banked time, part-time work, job sharing, educational leave, and leave with income averaging.

Through the recent review of human resource requirements based on business needs, the NEB requested and received additional resources through Treasury Board. These additional resources provide the basis to address the forecast project review workload while maintaining a strong regulatory oversight capacity. These resources also support succession planning and a more timely replacement rate as employees leave. To address the additional positions funded through the NEB’s submission to Treasury Board in 2007, a dedicated team has been established to lead and facilitate the hiring process.

Learning and development

A learning and development framework continues to be implemented to facilitate employee engagement and retention by providing the tools necessary for employees to understand their roles within the organization and their individual responsibilities as well as those of the organization for career progression. This framework is designed to provide employees with the skills and competencies necessary to fufill their current and future roles. Through this initiative, activities and programs are being developed which enable the NEB to deliver on its core work by fully optimizing its talent pool, whether for leadership positions or in support of professions within and across job families.

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