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Section II - Analysis of Program Activities

2.1 Strategic Outcome

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

The NEB operates and delivers its programs within a framework of five integrated goals:

• NEB-regulated facilities and activities are safe and secure, and are perceived to be so.
• NEB-regulated facilities are built and operated in a manner that protects the environment.
• Canadians benefit from efficient energy infrastructure and markets.
• The rights and interests of those affected by NEB-regulated facilities and activities are respected.
• The NEB delivers quality outcomes through innovation and leadership.

Together, the goals provide the framework for the NEB to achieve its strategic outcome. The goals also identify expected results for the NEB program activities and have related measures and targets.

As part of the goal and program-related measures and targets, the NEB has established service standards which identify specific delivery targets or timelines for key services. Meeting service standard targets consistently and with quality results reflects the NEB’s commitment to efficient and effective regulatory processes.

The NEB’s Strategic Plan outlines the NEB’s vision and purpose, and provides the structure for the goals framework. More information on the Strategic Plan and NEB service standards is available on the NEB’s website (http://www.neb-one.gc.ca).

2.2 Program Activities

The NEB has two main program activities: Energy Regulation and Energy Information. In addition, an Internal Services program activity provides support services such as the management of human resources, finance, and information technology. The following sections provide detail on the program activities, including how expected results will be achieved and the financial and non-financial resources required by each.

2.2.1 Program Activity: Energy Regulation

Program Activity Summary

This program provides the Canadian public, project proponents and other government agencies with regulation of international and designated inter-provincial power lines; construction, operation, and tolls and tariffs on international and inter-provincial pipelines; energy trade; and exploration and development in certain frontier and offshore areas. The companies that are regulated by the Board create wealth for Canadians through the transport of oil, natural gas and natural gas liquids, and through the export of hydrocarbons and electricity. As a regulatory agency, the Board’s role is to help create a framework which allows these economic activities to occur when they are in the public interest. The public interest is inclusive of all Canadians and refers to a balance of economic, environmental and social interests that change as society’s values and preferences evolve over time. The NEB’s regulatory outcomes focus on safe, secure and economically efficient infrastructure that is built and operated in a manner that protects the environment.

The Energy Regulation program has two sub-program activities:

• Energy Regulation Development: This program provides the regulatory expectations for applications and compliance with regulatory decisions. In order to make decisions in the Canadian public interest and to provide regulatory leadership that is responsive, proactive and innovative, the NEB must continually develop, improve and communicate regulations, regulatory and compliance tools, guidance, and processes. Related activities include developing and maintaining Memorandums of Understanding and related workplans, providing regulatory and technical expertise through standards associations, and sharing best practices.
• Energy Regulation Implementation: This program provides assessment and processing of regulatory applications submitted under the Acts administered by the NEB. It also provides regulatory oversight of energy infrastructure and markets through monitoring and enforcement activities. Responsibilities are pursuant to the NEB Act, COGO Act, CPR Act and the Canada Labour Code. Related services include stakeholder engagement and liaison, addressing landowner complaints, and facilitating appropriate dispute resolution.

Energy Regulation Program

Human Resources (FTEs) and Planned Spending (million $)
2009-2010		2010-2011		2011-2012
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
162.1	20.7	139.8	17.3	139.8	17.3
Energy Regulation Program: Expected Results:
NEB-regulated facilities and activities are safe and secure, and are perceived to be so NEB-regulated facilities are built and operated in a manner that protects the environment Canadians benefit from efficient energy infrastructure and markets The rights and interests of those affected by NEB-regulated facilities and activities are respected
Performance Indicators	Targets
Companies have adequate and effectively implemented safety, integrity and environmental management systems and programs	100% of companies regulated by the NEB have safety, integrity and environmental systems and programs in place
Percent of planned compliance activities completed	100% of planned compliance activities are completed
Public perception of pipeline safety (assessed through a proposed survey to be conducted every three years)	Establish a baseline for the level of public perception of pipeline safety
Public satisfaction with environmental protection (assessed through a proposed survey to be conducted every three years)	Establish a baseline for the level of public satisfaction with environmental protection for activity related to energy infrastructure development
The Board’s regulatory processes are measurably efficient and effective	All NEB service standards for its regulatory services are met (service standards are available on the NEB’s internet site at: http://www.neb-one.gc.ca under “Who we are and our governance”)
Percent of planned financial regulatory audits completed	100% of planned financial regulatory audits are completed
The rights and interests of those affected by NEB-regulated facilities and activities are respected Stakeholders are satisfied with NEB processes, information and interaction	Majority of stakeholders are satisfied with NEB processes, information and interaction

Planning Highlights

The Energy Regulation program has four Expected Results. The NEB has identified key objectives and related activities to achieve each result in the planning period.

Energy Regulation Program Expected Result:
NEB-regulated facilities and activities are safe and secure, and are perceived to be so

The Board follows a risk-based lifecycle approach for ensuring that companies have adequate and effectively implemented safety and integrity management systems and programs. Regulated companies have the primary responsibility for safety and environmental protection as they design, build and operate their facilities, while the NEB is responsible for setting the regulatory framework that enables the achievement of its safety, security and environmental protection goals. By using a risk-based lifecycle approach and its suite of regulatory tools, the NEB can verify that companies identify and effectively manage the safety, security, environmental, socio-economic and land risks posed by their facilities throughout their lifecycle.

Objective 1: The NEB will take proactive action to address safety and integrity occurrences

Activities:

• The NEB will promote safety and integrity through the sharing of information and effective reporting.
  • External outreach with industry will be undertaken to share findings and trends from compliance activities, incident investigations and company audits. The NEB will also promote the sharing of company best practices across the industry to support a cycle of continuous improvement.
  • The NEB will work with industry in developing a mandatory reporting structure for safety and integrity data. This initiative will be undertaken to improve reporting by focusing on leading indicators of performance.
• The NEB will conduct a review of NEB regulations on safety and pipeline integrity to ensure regulations are up-to-date and complete. Findings from incident investigations and company audits will be used to clarify expectations of safety and pipeline integrity programs with industry and other stakeholders. Clarification of NEB expectations of safety and integrity program goals will assist NEB-regulated companies to better understand what is required of them to meet compliance expectations.
• The NEB will continue to actively support the development of a Canadian Standards Association (CSA) Security Management Standard for the petroleum and natural gas industry. The Standard will be held and maintained by CSA, and provide guidance and structure for effective security program requirements. The NEB is chairing a CSA Technical committee with industry participants to develop appropriate standards for security programs. The committee has developed a draft standard for public review and the published national standard is expected to be officially released in the fall of 2009.

Objective 2: The NEB will develop information management tools to support the implementation of a risk-based lifecycle approach to the regulation of energy infrastructure

Activities:

• The NEB will develop a company information system for NEB-regulated companies. With data currently being generated from a number of information management tools in support of the risk-based lifecycle approach, a company information system is crucial in order to effectively use the data collected for analysis and decision-making purposes.

Energy Regulation Program Expected Result:
NEB-regulated facilities are built and operated in a manner that protects the environment

In the NEB’s regulatory context, environmental protection means that energy infrastructure is designed, built, operated, and abandoned with full consideration of potential environmental effects and applicable regulations. While all environmental impacts cannot be eliminated, the NEB expects industry to use good design practices and effective operational oversight to minimize undesirable environmental consequences of their activities. Effective environmental protection requires early engagement of landowners, Aboriginal communities, and other stakeholders to ensure that their knowledge and expectations about environmental outcomes are incorporated into project design and processes.

Objective 3: Improve communication of the NEB’s performance in minimizing environmental impacts to pipeline rights of way

Activities:

• The NEB will enhance communication and engagement in the environmental protection component of the regulatory program. Learnings gained from engaging ENGOs over the past year will be incorporated to improve the risk-based lifecycle approach to environmental protection. 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 are understood for all phases of the energy infrastructure lifecycle.
• The NEB will also focus on communicating its role and performance in minimizing environmental impacts to pipeline rights of way to stakeholders and the Canadian public.

Energy Regulation Program Expected Result:
Canadians benefit from efficient energy infrastructure and markets

The Board strives to ensure that Canadians benefit from efficient energy infrastructure and markets. The Board contributes to this goal through two main mechanisms: regulatory decisions around the construction and operation of energy infrastructure, and the provision of energy market information. The NEB’s program for Energy Regulation is focused on the first mechanism, while the NEB’s Energy Information Program addresses the provision of energy market information.

Objective 4: Ensure efficient and effective NEB regulatory processes

Activities:

• The NEB intends to make its regulatory processes more efficient and effective by focusing its regulatory oversight where it is most effective over the lifecycle of the infrastructure. In the coming year the Board will complete development and implementation of this risk-based lifecycle approach to regulation as a component of its goal oriented approach to regulation. The NEB’s goal oriented approach 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 from the initial planning and application stages through to abandonment. This approach will enable 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 will also enable the NEB to adjust its regulatory processes to fit the scope and risk of facility applications filed before the Board.
• The NEB will update and modernize regulations and continue to streamline regulatory processes where possible. The NEB will also incorporate toll and tariff regulation into its risk-based lifecycle management system approach.
• In order to provide certainty on process timelines, the NEB has established service standards for all of its regulatory processes and is intent on continuing to meet these standards. Over time these standards will be raised through continuous improvement and process streamlining.
• With an increasing interest in the North, the NEB will embark on a multi-year project to convert the frontier microfiche data into an electronic format. This will allow and promote the accessibility of frontier exploration and production data both within Canada and internationally.

Objective 5: Improve efficiency and effectiveness of regulatory processes in partnership with other agencies

Activities:

• As NEB processes are often part of a broader regulatory process, it must work with its partners to achieve regulatory efficiency and effectiveness. For example, the NEB plans to continue to work with INAC and NRCan on changes to improve the legislative framework in the North through amendments to the COGO Act and CPR Act.
• The NEB will continue to support the Major Projects Management Office. The goal of the Major Projects Management Office, operated through NRCan, 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.
• Through the NEB’s Land Matters Consultation Initiative, input was received relating to policy matters within the mandate of NRCan, including participant funding. If NRCan decided to pursue this item, then the NEB would work with NRCan to assess, and, if appropriate, implement any changes with respect to participant funding. Presently, the NEB is able to provide participant funding only for landowners participating in detailed route hearings, under s. 39 of the NEB Act.
• The NEB will continue to partner with the CEA Agency, the Major Projects Management Office, and other federal, provincial and territorial regulators to develop efficient and effective regulatory processes. The NEB will work collaboratively with its regulatory partners and Aboriginal organizations in the North, and capitalize on any opportunities to streamline regulatory processes.

Energy Regulation Program Expected Result:
The rights and interests of those affected by NEB-regulated facilities and activities are respected

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. With the recommendations on land matters that emerged from consultation that the NEB conducted in 2008-2009, the NEB is working to extend the Board’s risk-based lifecycle management system requirements to encompass the rights and interests of those affected by NEB-regulated facilities and activities. At the same time, the NEB will work with landowners to clarify and communicate project review engagement processes. In support of the Crown’s obligation to consult, the NEB will also enhance its Aboriginal engagement program to ensure that Aboriginal people understand NEB processes and can effectively participate in those decision-making processes.

Objective 6: Extend the Board’s risk-based lifecycle approach – which is in place for safety, security and protecting the environment – to respecting the rights and interests of those affected by NEB-regulated facilities and activities

Activities:

• The NEB will extend its risk-based lifecycle management system that is in place for safety, security and protecting the environment to encompass the rights and interests of those affected by NEB-regulated facilities and activities. The implementation is based on the outcomes from the NEB’s Land Matters Consultation Initiative. This step will clarify expectations for land matters by identifying expectations and best practices for consultation and notification processes which companies are expected to apply. It will also provide input for NEB compliance verification of company consultation management systems. Program area activities will relate to company interactions with landowners and improving accessibility of NEB processes to all stakeholders.
• The NEB will incorporate the socio-economic and lands regulation into its risk-based lifecycle approach. This entails setting expectations and developing compliance verification tools on these matters for every stage of the facility lifecycle.

Objective 7: Clarify regulatory expectations for the abandonment phase of the facility lifecycle

Activities:

• The NEB will provide clarification on its regulatory expectations for both financial and physical issues related to the abandonment phase of facility lifecycle. Clarification of regulatory expectations will be based on outcomes from the NEB’s Land Matters Consultation Initiative held in 2008-2009.

Benefits to Canadians

The NEB’s program for Energy Regulation provides Canadians with regulation of pipelines, international power lines, energy development and trade. The regulatory framework focuses on ensuring Canadians have safe, secure and economically efficient energy infrastructure that is built and operated in a manner that protects the environment. Federally regulated systems transport over $100 billion worth of energy annually to markets in Canada and elsewhere. Regulated companies create wealth for Canadians through the transport of oil, natural gas and natural gas liquids, and through the export of hydrocarbons and electricity. In 2007 the revenue from energy exports from Canada exceeded $90 billion, the majority of which was exported via NEB-regulated systems. The NEB contributes to Canada’s strong economic growth by creating a regulatory framework that balances economic activities with the public interest.

2.2.2 Program Activity: Energy Information

Program Activity Summary

The NEB’s Energy Information program provides the Board, industry, policy makers, and the Canadian public with energy industry information and market surveillance. This includes providing an outlook for supply and demand of energy commodities in Canada to assist in decision-making regarding energy infrastructure and markets by policy makers, industry and the public.

This program meets requirements under Part II of the NEB Act by informing Canadians on energy market developments and issues related to the Board’s regulatory mandate, which are primarily in the gas, oil and electricity market sectors, and under Part VI of the NEB Act by providing market analysis to determine whether exports are surplus to Canadian needs and Canadians are able to access energy at fair market prices.

Energy Inforamtion Program

Human Resources (FTEs) and Planned Spending (million $)
2009-10		2010-2011		2011-2012
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
57.1	7.3	50.1	6.2	50.1	6.2
Energy Information Program Expected Results:
Canadians benefit from efficient energy infrastructure and markets
Performance Indicators	Targets
The Board’s advice and energy information products are relevant and timely Feedback from internal and external clients on Energy Information Program products via questionnaires after workshops, comments cards with publications, interviews with clients NEB website provides timely and relevant energy market information	Majority of feedback shows that Energy Information Program clients find products useful and relevant Meet or exceed visits to content on the NEB website from previous year

Planning Highlights

Through its Energy Information Program, the Board monitors energy markets and provides Canadians with a broad suite of information and analysis in areas primarily related to its mandate. The NEB develops an annually updated plan for this program, ensuring that areas chosen for research and analysis are timely, relevant and linked to its mandate. In the next fiscal year, the Board will be updating its reference case from Canada’s Energy Future: Reference and Scenarios to 2030, which represents the NEB’s long term view of energy supply and demand based on decisions made and on current trends.

Energy Information Program: Expected Result
Canadians benefit from efficient energy infrastructure and markets

In its Energy Information Program, the Board will focus on informing Canadians on energy market developments and issues related to the Board’s regulatory mandate, primarily for gas, oil and electricity market developments. The NEB collects and analyses information about Canadian energy markets through regulatory processes and market monitoring in order to support the Board’s regulatory program and to provide public information to support better decisions by policy makers, industry and the public.

Objective 1: Inform Canadians on emerging market issues and regulatory challenges related to the responsible development of infrastructure through the NEB’s Energy Information Program

Activities:

• Implement the NEB’s annually updated plan for its Energy Information Program. This is comprised of Energy Market Assessments, which provide detailed analyses for aspects of Canada’s energy system, briefing notes, public speeches and presentations by Board Members and senior staff, energy pricing information on the NEB website and semi-annual energy market outlooks.
• Develop the Joint Data Initiative with NRCan to improve the quality of Canadian energy data.
• Advance the commodities tracking system to develop an Electronic Data Interchange for energy import and export data.

Benefits to Canadians

The NEB’s Energy Information Program contributes to efficient Canadian energy markets, and strong economic growth for Canada, through the sharing and monitoring of energy information. Through this program, policy makers, industry and the Canadian public have access to expert knowledge and energy market information to make informed choices about energy market options. Through its monitoring of energy exports, the Board ensures that Canadian energy users have access to domestically produced energy on terms and conditions at least as favourable as those available to export buyers, and ensures that energy markets are functioning properly.

2.2.3 Program Activity: Internal Services

Program Activity Summary

Internal services enable the NEB’s mandate by providing, managing and maintaining necessary support services, including overseeing and administering the application of associated legislation and regulations. They include: Management and Oversight, Human Resources Management, Financial Management, Supply Chain Management, Facilities/Asset Management, Information Management, Information Technology, Evaluation Services, and Internal Audit Services.

Internal Services Program

Human Resources (FTEs) and Planned Spending (million $)
2009-10		2010-2011		2011-2012
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
128.4	16.4	106.7	13.2	106.7	13.2

Planning Highlights

The NEB’s Internal Services program requires sound business management and effective decision-making to ensure that the organization has the people, technology, facilities, records management procedures, and financial resources available to carry out its mandate.

Internal Services Program: Expected Result
The NEB delivers quality outcomes through innovation and leadership

The NEB has identified several priorities related to achieving the program’s Expected Result in 2009-2010.

Objective 1: Ensure the NEB has the necessary capacity to fulfill its mandate

The NEB mandate requires employees with considerable skills and expertise in specialized areas. Employee planning and development initiatives are required to ensure the NEB can recruit, retain and develop its employees while maintaining knowledge within the organization. The NEB plans to complete the implementation of a learning and development framework to facilitate employee learning, career development and retention in 2009-2010. In addition, staffing processes will be streamlined, including a renewal of the classification system for NEB positions.

The NEB is also focusing on improving its corporate processes by building capacity, enhancing the quality of its services and ensuring that its services are conducted in a timely and cost-effective manner for Canadians. Improvement to the NEB’s financial management system and it business continuity plan are two activities planned for 2009-2010 related to improving corporate efficiency. Financial and human resources processes will be incorporated into the NEB’s Quality Management System to ensure process consistency and knowledge maintenance.

Objective 2: Integrate quality management principles throughout the organization

In previous planning periods, the NEB implemented a Quality Management System based on the ISO 9000 Standard as part of its commitment to remain a respected leader in energy regulation. Quality management ensures that NEB processes and accountabilities are documented and consistently followed in order to identify process efficiencies, enhances knowledge transfer between employees and provides a means to effectively measure improvement. The NEB has an operational quality management system, but now must fully integrate the underlying quality management principles into all that it does. In 2009-2010, the NEB plans to achieve this through increasing engagement of all staff by raising their awareness and understanding of the benefits of quality management, completing process documentation, practicing continual improvement, and improving executive oversight of the quality management system.

Objective 3: The NEB is a top employer

The NEB has struggled with high attrition rates in a very competitive market and has developed and implemented several initiatives to improve its competitiveness. These efforts are yielding results and recently the NEB was recognized as one of Canada’s Top 100 employers for 2008 in a study conducted by a national newsmagazine. The criteria assessed included work atmosphere, family benefits, vacation time and performance management. The NEB is committed to maintaining a work environment that allows it to be recognized as a top employer in Canada. Aspects of this positive work environment include: a commitment to recognizing innovation and leadership at all levels of the organization; promoting a balance between professional and personal life; supporting career, family and personal goals; helping employees reach their full potential; and promoting NEB values and culture everyday. Employee satisfaction measures, along with recognition from outside the organization, will be key indicators of the NEB’s success in maintaining a highly skilled and highly motivated workforce.

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