RPP 2001-2002
National Energy Board

2001-2002 Estimates
Part III - Report on Plans and Priorities

The Honourable Ralph Goodale, P.C., M.P.
Minister, Natural Resources Canada

Kenneth W. Vollman 
Chairman, National Energy Board 

The Estimates Documents

Each year, the government prepares Estimates in support of its request to Parliament for authority to spend public monies. This request is formalized through the tabling of appropriation bills in Parliament. The Estimates, which are tabled in the House of Commons by the President of the Treasury Board, consist of three parts:

Part I - The Government Expenditure Plan provides an overview of federal spending and summarizes both the relationship of the key elements of the Main Estimates to the Expenditure Plan (as set out in the Budget).

Part II - The Main Estimates directly support the Appropriation Act. The Main Estimates identify the spending authorities (votes) and amounts to be included in subsequent appropriation bills. Parliament will be asked to approve these votes to enable the government to proceed with its spending plans. Parts I and II of the Estimates are tabled concurrently on or before 1 March.

Part III - Departmental Expenditure Plans which is divided into two components:

Departmental Performance Reports (DPRs) are individual department and agency accounts of accomplishments achieved against planned performance expectations as set out in respective RPPs. These Performance Reports, which cover the most recently completed fiscal year, are tabled in Parliament in the fall by the President of the Treasury Board on behalf of the ministers who preside over the departments and agencies identified in Schedules I, I.1 and II of the Financial Administration Act.

The Estimates, along with the Minister of Finance's Budget, reflect the government's annual budget planning and resource allocation priorities. In combination with the subsequent reporting of financial results in the Public Accounts and of accomplishments achieved in Departmental Performance Reports, this material helps Parliament hold the government to account for the allocation and management of public funds.

© Her Majesty the Queen in Right of Canada, represented by the Minister of Public Works and Government Services, 2001

Available in Canada through your local bookseller or by mail from Canadian Government Publishing (PWGSC) Ottawa, Canada K1A 0S9

Telephone: 1-800-635-7943

Internet site: http://publications.pwgsc.gc.ca Catalogue No. BT31-2/2002-III-14 ISBN 0-660-61455-3

Section I: Messages

• Chairman's Message

1. Mandate, Roles and Responsibilities
2. Objectives
3. Planning Context
4. Planned Spending

1.    Planned Spending and Full Time Equivalents (FTE)
2.    Business Line Objective
3.    Business Line Descriptions
4.    Key Results Commitments, Planned Results, Related Activities, and Resources
   1. NEB-regulated facilities are safe and perceived to be safe
   2. NEB-regulated facilities are built and operated in a manner that protects the environment and respects individuals' rights
   3. Canadians derive the benefits of economic efficiency
   4. The NEB meets the evolving needs of the public to engage in NEB matters

1. Horizontal Initiatives
2. Collective Initiatives

Section VI: Other Information

• List of Acts and Regulations
• Structure and Personnel
• References
• Clients and Stakeholders

Section I: Messages

Chairman's Message

It is my pleasure to present the Report on Plans and Priorities of the National Energy Board (the Board or the NEB).

The Board's corporate purpose is to promote safety, environmental protection and economic efficiency in the Canadian public interest while respecting individuals' rights and within the mandate set by Parliament in the regulation of pipelines, energy development and trade. In fulfilling this purpose, our vision is to be a respected leader in safety, environmental and economic regulation.

In carrying out its regulatory responsibilities, the Board is challenged by the restructuring that is occurring in energy markets and by the impacts of high and volatile energy prices, especially for oil and natural gas. At the same time, the public expects that pipelines, and other facilities under the Board's jurisdiction, are constructed and operated in a safe manner, with no adverse consequences to the environment. As part of its mandate, the Board provides opportunities for the public to participate in its processes, so that their concerns are heard and acted upon. In its strategic plan, the Board pursues four goals to respond to these issues with well-defined actions and specific measures to monitor progress.

With respect to our first goal, that NEB-regulated facilities are safe and perceived to be safe, a major strategy is the move towards goal-oriented regulation. By promoting the use by regulated companies of goal-oriented safety management systems, we expect to see increased industry ownership of safety performance and, as a result, continuous improvements in the safety performance itself.

The second goal is that facilities are built and operated in a manner that protects the environment and respects individuals' rights. We have completed the planning phase of our Environmental Management Program (EMP), including the identification of environmental performance indicators. In 2001-2002, we will fully implement the EMP and be in a better position to achieve continuous improvements in environmental protection. A similar approach for management and continuous improvement of work related to land owners' and land users' interests will begin in 2001-2002.

Our third goal is that Canadians derive the benefits of economic efficiency. To achieve this goal the Board has identified two major strategies. First, we monitor and publicly report on energy markets, ensuring a balanced representation of the issues affecting energy market participants. The second strategy is to anticipate and prepare for emerging regulatory issues and events. For example, renewed interest in energy resource development in the Canadian North may result in a proposal for a natural gas pipeline to transport gas to southern markets.

The fourth goal is that the NEB meets the evolving need of the public to engage in NEB matters. Major actions here are geared toward improving the public's awareness, accessibility and satisfaction regarding the Board's information and regulatory processes. Key to these actions is the Board's commitment to electronic service delivery concurrent with the Government On Line (GOL) strategy.

The energy industry and energy markets have changed dramatically over the past several years, from regimes experiencing low world oil prices to record high North American gas and electricity prices. During this period, a much heightened public awareness of safety and environmental issues has emerged.

The work of the Board is clearly of interest and importance to Canadians. I am confident that the strategies and actions outlined in this report will deliver concrete results to them over the coming years.

Kenneth W. Vollman Chairman

Section II: Board Overview

(NEB Act). The Board has all the powers vested in a superior court of record¹ with regard to attendance at hearings, the swearing in and examination of witnesses, the production and inspection of documents and the enforcement of its orders. The NEB Act provides for up to nine permanent Board Members. Most oral hearings are conducted by three Members, who constitute a quorum of the Board, with one acting as Presiding Member. The Board's regulatory decisions and the reasons for them are issued as public documents.

The Board has regulatory powers under the NEB Act, the Canada Oil and Gas Operations Act (COGO Act) and 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. The Board's mandate includes the provision of expert technical advice to the Canada-Newfoundland and Canada-Nova Scotia Offshore Petroleum Boards, Natural Resources Canada (NRCan) and Indian and Northern Affairs Canada.

Furthermore, the Board has specific responsibilities under the Northern Pipeline Act and the Energy Administration Act. In addition, Board inspectors are appointed safety officers by the Minister of Human Resources Development Canada to administer Part II of the Canada Labour Code as it applies to facilities regulated by the Board.

The Board also has an advisory function and may, on its own initiative, hold inquiries and conduct studies on specific energy matters as well as prepare reports for the information of 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 carries out studies and reports at the request of the Minister of Natural Resources.

As a matter of key public interest, the Board has long been responsible for conducting environmental assessments of energy projects within its jurisdiction. Additionally, since 1995, the Board has specific responsibilities under the Canadian Environment Assessment Act (CEA Act). Pursuant to the NEB Act and the COGO 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.

1 This means, for example, that evidence before the Board is given under oath, subpoenas can be issued for the attendance of witnesses and the orders of the Board can be enforced.

Purpose

The Board's corporate purpose is to promote safety, environmental protection and economic efficiency in the Canadian public interest while respecting individuals' rights and within the mandate set by Parliament in the regulation of pipelines, energy development and trade.

Vision

The Board's vision is to be a respected leader in safety, environmental and economic regulation.

Structure

The structure of the Board is shown in detail in Section VI Structure and Personnel on page 27 of this report.

B. Objectives

1. To regulate, in the public interest, those areas of the oil, gas and electricity industries relating to:

• the construction and operation of international and interprovincial pipelines;
• the construction and operation of international and designated interprovincial power lines;
• traffic, tolls and tariffs of international and interprovincial pipelines;
• exports of oil, gas and electricity and imports of gas and oil; and
• oil and gas activities on frontier lands not subject to a federal/provincial accord.

2. To provide advice to the Minister of Natural Resources on the development and use of energy resources.

C. Planning Context

Energy Prices

Currently, the most significant external factor influencing the Board's responsibilities is the large run-up in natural gas prices that occurred during 2000. Natural gas spot prices rose to unprecedented levels. The recent price increases had significant impact because natural gas users had become accustomed to relatively low prices during the previous decade.

World oil prices remained near their highest levels since the Iraq/Kuwait conflict in 1990, although there was some easing towards the end of the year. Evolving market conditions in the electricity industry have resulted in regional concerns about electricity prices, particularly in Alberta. These recent trends reinforce the need for the Board to monitor and report on energy market developments.

Higher energy prices have caused Canadians to become more interested in, and concerned about, energy matters. Throughout the 1990s, many Canadians invested in businesses, business processes and vehicles that use relatively large amounts of energy. The sudden large increase in energy prices is putting increased financial burden on consumers and is threatening the viability of some energy-intensive businesses.

At the same time that Canadians are facing large increases in energy costs, the country is exporting record amounts of natural gas, crude oil and other hydrocarbons. The Canadian energy market has become increasingly linked to the North American natural gas and electricity markets. Consequently, the Canadian market cannot be insulated from events in the U.S.

The rapid natural gas price increases are sending a strong signal to the producing sector of the industry to develop new supplies. The industry responded by drilling a record number of gas wells in 2000, and it is anticipated that there will again be a significant increase in exploration effort in 2001. The cash flow that is being generated by the high prices is providing a source of funds for upstream companies to increase their exploration efforts.

Frontier Resource Development

Many industry analysts believe that it will be necessary to develop frontier resources to meet the increased market demand for natural gas in North America. The most likely frontier areas to be developed include the Mackenzie Valley, Mackenzie Delta area, Alaskan North Slope area and offshore Nova Scotia. The NEB expects that within the planning period it will receive one or more applications to build a major natural gas pipeline to carry frontier natural gas supplies to markets in Canada and the U.S.

The regulatory process to assess an application for a large northern pipeline will be complex, involving many federal, territorial and First Nations authorities. The high price situation, and attendant need to develop new energy sources, will result in strong demands that a clear and efficient regulatory procedure be established. As a leading regulatory agency, the NEB will need to cooperate closely with all the relevant authorities to ensure a fair and efficient process.

In the near term, increased development is expected in the southern Territories building on the exploration successes in the Fort Liard area. Projects in this region are within economic reach of the existing pipeline network.

Environment and Safety

While most Canadians appreciate the need to develop new energy supplies, there is a growing expectation that corporate entities and government bodies ensure that beneficial economic development does not proceed at the expense of the environment and human health. While there are concerns about the impacts of pipeline development in pristine northern environments, landowners in southern areas are also increasingly demanding that they be dealt with fairly by pipeline companies whose facilities cross their lands. The NEB is being challenged to provide clear and efficient regulatory procedures that do not delay the development of new energy projects, while at the same time ensuring that the rights of landowners are properly protected and that the integrity of ecosystems is preserved.

The pipeline industry in Canada has an excellent safety record. The risks imposed by pipelines to public health and safety are relatively small, particularly when compared to other modes of transportation. Nonetheless, Canadians expect to be protected from risks such as gas line explosions or ground water contamination from oil line failures.

Pipeline Industry Restructuring

Another significant industry development that will impact the NEB is the changing structure of the Canadian natural gas pipeline industry. On 1 December 2000, the Alliance Pipeline Ltd. (Alliance) system, which transports natural gas and natural gas liquids from northeastern B.C. and Alberta to the Chicago market area, commenced operations. At the same time, the Vector Pipeline Ltd. (Vector) system, which connects to Alliance and other Chicago-area pipelines and delivers natural gas to southern Ontario, also commenced operations. The combination of Alliance and Vector is providing natural gas producers and buyers with an alternative transportation route to the TransCanada PipeLines Limited (TransCanada) system, which previously was the only means of moving gas from western Canada to eastern Canadian markets.

Increased competition is also occurring in B.C. BC Gas Ltd. has constructed the Southern Crossing Project, a pipeline which can transport Alberta natural gas across southern B.C. to the lower mainland area. The pipeline provides consumers in that area with an alternative source of gas. It is also possible that the Maritimes and Northeast Pipeline Management (M&NP) system and the Trans-Québec & Maritimes Pipeline Inc. (TQM) system will be connected thereby providing central Canadian consumers with an alternative source of natural gas.

The development of competition in the natural gas pipeline industry is changing the long-standing paradigm under which the traditional pipeline companies were regulated. For example, with the start-up of Alliance, some shippers on TransCanada are not renewing their contracts. These developments are eroding the basis for the traditional cost-of-service regulatory framework and challenging the NEB to develop new approaches to the economic regulation of pipelines under its jurisdiction.

Table 2.1: Planned Spending

Table 2.2: Full Time Equivalents

Section III: Plans, Results and Resources

A. Planned Spending and Full Time Equivalents (FTE)

Business Line: Energy Regulation and Advice

Table 3.1: Net Planned Spending ($ millions) and Full Time Equivalents (FTE)

B. Business Line Objective

1. To regulate, in the public interest, those areas of the oil, gas and electricity industries relating to:

• the construction and operation of pipelines;
• the construction and operation of international and designated interprovincial power lines;
• traffic, tolls and tariffs of pipelines;
• exports of oil, gas and electricity and imports of gas and oil; and
• oil and gas activities on frontier lands not subject to a federal/provincial    accord.

2. To provide advice to the Minister of Natural Resources on the development and use of energy resources.

C. Business Line Descriptions

Energy Regulation and Advice

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 that allows these economic activities to occur when they are in the public interest.

The NEB's Key Result Commitment is to provide Canadians with social and economic benefits through regulation of specific parts of the Canadian energy industry. For Planned Results, the Board has identified four goals discussed in detail below. The strategies and major actions which are identified for each goal will together allow the Board to deliver its Key Result to Canadians. The extent to which these outcomes are achieved will be reported in the Board's Departmental Performance Report.

The NEB's planned spending in 2001-2002 is $29.9 million. The resources of the NEB fully support the four corporate goals and it is anticipated that the direct and indirect operating costs of the NEB will be utilized equally by the four goals.

To achieve results for Canadians over the period of this three-year plan, the Board will employ four corporate strategies:

• move toward goal-oriented regulation;
• monitor and report publicly on energy markets and their functioning;
• anticipate and prepare for emerging issues and upcoming applications; and
• enable Canadians to effectively participate in Board matters.

1. NEB-regulated facilities are safe and perceived to be safe.

Planning Context

The NEB's goal is to see that pipelines are safe and perceived by the public to be safe. This goal has two different challenges, which require different approaches. Despite decreasing numbers of incidents and pipeline ruptures on NEB-regulated pipelines, the NEB has noted an unprecedented interest by the public in the issue of pipeline safety. This interest has been, in part, caused by recent pipeline failures in the United States, particularly the tragedies in Bellingham, Washington and Carlsbad, New Mexico. These events have caused Canadians to question the safety of pipelines. The Canadian pipeline infrastructure has not been without event as indicated by recent failures on an oil pipeline in northeastern B.C., a gas pipeline adjacent to the Coquihalla highway in B.C. and a recent explosion at a pipeline compressor station in Québec.

To build public confidence it is important that the Board demonstrates that it is listening to and respects public concerns. It must show that companies are effectively and pro-actively managing risks.

The inherent risks from pipelines can be effectively managed through competent design, construction and maintenance practices. As designer, constructor and operator, a pipeline company has the greatest control over a facility and, as such, has the primary responsibility for the safety at that facility. While the primary onus for safety rests with industry, government plays a significant role in promoting it by ensuring a regulatory framework is in place that encourages companies to maintain and improve their performance. Where the industry has failed to lead, the Board has taken action to address safety concerns.

The diversity of Canada's pipeline infrastructure suggests that each system is unique and that a "one size fits all" approach to safety may not be very effective or appropriate. Therefore, a move to goal-oriented regulation is an important step in allowing industry to address the risks and improve the overall level of safety in a cost-effective way.

In 1999, the Board revised the Onshore Pipeline Regulations (OPR99) to reflect the goal-oriented approach. The Board has implemented a comprehensive auditing program to verify that companies are effectively identifying and managing the risks associated with pipelines. This program, designed to improve compliance with the regulations and promote improved safety and environmental performance, will require increased Board resources.

The NEB believes that a combination of goal-oriented and prescriptive elements will ensure the onus for performance remains properly with the companies. It will also encourage companies to develop pro-active management systems that address the unique risks of their pipelines. At the same time, the Board promotes the use of high technical standards which have proven themselves over time, specifically Canadian Standards Association Standards Z662 Oil and Gas Pipeline Systems.

Despite increasing pipeline mileage, the number of ruptures on NEB-regulated pipelines has been few and trending downwards in recent years, from a high of six in 1994 to one a year from 1998 to 2000. Reducing ruptures to zero will be a challenge but continued improvements in integrity tools and methods may make that an attainable target. The Board will be examining its processes and practices to encourage companies to share this objective and take the necessary steps to achieve this target.

The inspection of a number of large pipeline construction projects posed a significant challenge to the Board's resources in the past few years, with the most prominent projects being the Alliance and M&NP pipelines. The Board expects a lower level of pipeline construction activity in 2001-2002 consisting of relatively modest mainline expansions and feeder pipelines connecting to new producing areas.

Activity levels in the upstream sector north of the 60^th parallel, for which the NEB has regulatory responsibilities, will continue to increase as the economics of northern development continue to be strong. The NEB has seen a substantial increase in exploration and production work in the north. Since 1998, there has been a doubling of person-hours worked by employees of exploration companies and their contractors. Recent land sales in the Mackenzie Delta and Beaufort Sea, as well as in the central Mackenzie area, have resulted in major exploration programs being planned, starting with 10 000 kilometres of seismic work in the Mackenzie Delta. Consequently, the potential for incidents in these areas will also rise. The NEB must ensure that it has the resources to ensure continued high levels of safety in this area.

The public expects NEB-regulated facilities to be safe. The Board is continually looking for ways to involve the public and also encourages the pipeline companies to provide information on pipeline safety performance. The Board's approach of diligently working with the industry and key stakeholders in a cooperative manner should lead to continued improvements in regulatory compliance and safety levels over time.

Gaps

• lack of information in the public domain regarding the safety performance of NEB-regulated pipelines
• collection and management of information related to pipeline safety to better document pipeline performance and focus resources

Strategy

• move towards goal-oriented regulation to improve the industry's ownership of safety performance by promoting the use of safety and environmental management systems

Measure

• number of pipeline ruptures and incidents

Major Actions

2001-2002

• Revise regulations to progress towards goal-oriented regulation. Regulations for processing plants, pipeline crossings and damage prevention regulations, oil and gas drilling, production, and conservation need to reflect a goal-oriented approach and increased emphasis on maintenance and risk management.
• Continue the planning and implementation of a NEB Safety Management Program, including a safety policy to clarify the NEB's role in safety regulation and a management system for optimal future results, efficiency and quality. Continue to implement OPR99 and adjust the Board's existing approach to its compliance and audit programs to promote the use of safety and environmental management systems. Review OPR99 and its companion guidance notes to build on experiences from the first few years.
• Expand the capability of the NEB's Environment and Safety Information
• Management System (ESIMS) to better integrate information on environment and safety.

• Implement the Safety Management Program.
• Enhance ESIMS to better integrate information on environment and safety.
• Continue to revise regulations to progress towards goal-oriented regulation.

• Continue the progress made towards goal-oriented regulation.

Planning Context

The second goal expresses the Board's strong commitment to protection of the environment and respect for individuals' rights in the construction and operation of regulated pipelines and facilities. Every year, the Board assesses the environmental and socio-economic impact of more than 100 facilities-related projects which are submitted for approval pursuant to Part III of the NEB Act, as well as applications for exploration and production activity in frontier areas submitted under the COGO Act. The Board continually strives to improve its processes for assessing and tracking the impacts of projects and facilities under its jurisdiction. In 2000-2001, the Board continued and enhanced its work on clarifying desired environmental outcomes and key performance indicators, and on streamlining its assessment processes while maintaining its mandate to ensure environmental protection and respect for individuals' rights.

Environmental Management Program

The Board recognizes that effective management systems are an integral part of managing safety and protecting the environment. As part of its efforts to contribute to the achievement of Goal 2, the Board has developed and implemented its own Environmental Management Program (EMP). The EMP is based on ISO 14001 principles, an internationally recognized standard for environmental management systems. Comprising five primary elements, the EMP is helping to focus and integrate the Board's environmental efforts and to clarify the role of the Board and its expectations and responsibilities regarding environmental protection for all interested parties. In Figure 1, specific EMP elements and associated sub-elements are represented within the continual improvement cycle.

Figure 1 NEB Environmental Management Program

The Board has completed the first element of the EMP which was to develop the NEB Environmental Policy. Centred around the core values of the NEB, the policy reflects the overall environmental direction and aligns management and staff with common principles of operation. The second phase of the EMP, developing the Planning element, is nearing completion. The Planning element focuses on setting environmental objectives, targets and performance indicators to move towards measuring and improving the NEB's environmental performance. The Board has also developed initial corporate environmental performance indicators to measure the NEB's degree of success in contributing towards environmental protection. The Board will fully implement the EMP in 2001-2002 and use it as the basis for setting priorities, work planning and continual improvement.

Environmental and Safety Information Management System

The Environmental and Safety Information Management System (ESIMS) project is aimed at developing a database for recording and tracking environmental and safety issues relating to the construction and operation of NEB-regulated facilities. The system was developed and released for internal use in May 2000. Currently, conditions placed on Board approvals relating to new facilities are tracked for compliance. Conditions tracked include reclamation of disturbed lands to ensure protection of the environment and landowner rights. Additional information tracking modules were added in November 2000 relating to other environmental and safety matters. By the end of the fiscal year, the NEB plans to add additional modules, and complete a plan related to defining the quality of environmental inspections and audits, as well as compliance monitoring. Ongoing improvements of ESIMS will continue into the next fiscal year.

Non-Hearing Applications Streamlining Project

In 2000-2001, the NEB developed and implemented a streamlined internal process for assessing non-hearing facilities applications. The development of the process involved the identification of standard assessment issues, including environmental and landowner concerns. Work on this project highlighted the necessity of identifying the Board's information needs and establishing standard technical and environmental requirements. Planning and development of programs to examine these needs and requirements commenced this year and will continue in 2001-2002.

Developments in the Canadian North

Over the past year, the NEB dealt with an increasing number of applications for exploration and production activity in the Canadian North, and continued to anticipate and prepare for regulatory filings for associated major gas pipeline construction. Preparation includes work in respect of applications under the NEB Act and the COGO Act and work with other regulators to clarify and streamline, where possible, the regulatory process for both facilities applications and pipelines. In late 2000, the NEB and the Mackenzie Valley Environmental Impact Review Board signed a Memorandum of Understanding to establish a cooperative framework for environmental impact assessment in the Mackenzie Valley. Board staff are active with other federal departments and other regulators in both the Northwest Territories and Yukon in defining future regulatory needs and processes.

Gaps

• lack of clarity and shared understanding of:
  • the expected technical quality of environmental assessments conducted by the NEB and its regulated companies
  • the expected quality of environmental inspections and audits conducted by the Board
  • acceptable environmental protection outcomes 
• minimal knowledge of the effectiveness of:

  • NEB requirements for environmental protection

  • measures used to protect the environment in pipeline construction and operation

Strategies

• continued development and implementation of the EMP
• development of initiatives to contribute to environmental objectives identified through the EMP

• environmental assessment participants satisfied that the appropriate factors were considered and addressed
• landowners satisfied that commitments made regarding reclamation have been met

2001-2002

• Carry out the Implementation and the Measuring and Evaluation elements of the EMP.
• Carry out initiatives based on the environmental objectives identified through the EMP.
• Improve the ESIMS, if and where necessary, to provide measurements related to selected environmental and safety performance indicators. 
• Prepare for renewed activity in the Canadian North.

• Complete the Review and Improvement element of the EMP and maintain the EMP.
• Identify new environmental objectives through the EMP and carry out initiatives based on these objectives.
• Communicate results of the technical quality and process improvement projects to regulated companies and the public.

• Maintain the EMP.
• Identify new environmental objectives through the EMP and carry out initiatives based on these objectives.

3. Canadians derive the benefits of economic efficiency.

Planning Context

The Board's third corporate objective is to ensure, to the extent that it can influence economic outcomes, that Canadians derive the benefits of economic efficiency.

The economic objective with respect to pipeline responsibilities is to promote the development of an efficient natural gas and oil transmission system that meets shippers' needs and benefits end users. More specifically, the Board supports the development of a mix of service options that meet shippers' needs because this will enhance the efficiency of the gas and oil transmission network. It also promotes, to the extent possible, prices that reflect the competitive market value of services. Again, such pricing will send the right price signals to system users and promote the efficient use of pipeline facilities. The Board strives to ensure that there is adequate pipeline capacity in place, because shortages of capacity result in pricing distortions and prevent desirable flows of energy to consumers.

In addition to these economic efficiency objectives, the Board also ensures that pipeline customers are treated fairly and shareholders in pipeline companies have a fair opportunity to earn an economic return on invested capital.

With respect to its natural gas export regulation responsibilities, the Board operates on the basis that the marketplace will generally operate in such a way that Canadian requirements for natural gas will be met at fair market prices. It relies on the Market-Based Procedure to fulfil this responsibility, which consists primarily of closely monitoring the gas market and providing opportunities for Canadians to file complaints concerning access and pricing.

With respect to oil and electricity, the objective is to ensure that Canadians have a fair opportunity to purchase oil and electricity on similar terms and conditions as those made available to export customers. This is achieved by providing Canadian oil and electricity purchasers with an opportunity to intervene in applications to export oil or electricity from Canada. The Board believes that if oil, natural gas and electricity markets are working properly, the needs of Canadians will be satisfied at fair market prices.

The Board's main impact on the economic efficiency of the industry comes through the decisions it renders on applications. It also influences economic efficiency through its regulatory processes and the energy market information it releases to the public.

The Board must ensure that its regulatory processes do not impose undue costs on applicants by causing unnecessary delays. To this end, it continually reviews its application processing procedures to ensure they are as efficient as possible while still protecting the public interest. The Board is pro-actively preparing for applications by ensuring that its regulatory processes and public engagement strategies are well defined ahead of a filing.

Throughout the 1990s, the Board encouraged parties to settle as many pipeline tolling issues as possible through negotiation, rather than dealing with them through arbitration at a formal hearing. It is currently exploring alternative approaches to providing dispute resolution services that may be less costly and more flexible than formal hearing processes.

The NEB plays an important role in providing expert and objective energy market information to Canadians. It provides statistics on energy flows, reserves, prices, production and consumption throughout the country. The Board believes it is particularly important to report regularly on the functioning of the natural gas market and on the adequacy of natural gas supplies to meet the needs of Canadians. Given the increasingly close relationship between natural gas and electricity markets, it will also monitor electricity market developments in Canada.

Gaps

• Canadians may not be receiving adequate information and assurances that the natural gas market is functioning properly and that gas supplies will be sufficient 
• perception in some regions that the NEB does not have an adequate appreciation of consumer perspectives on energy market issues 
• further development of options to help industry resolve disputes (e.g., alternative dispute resolution mechanisms) 
• concerns that the Board is no longer fully cognizant of the issues facing pipeline companies and their shippers, due to the reliance on negotiated settlements for pipeline tolls during the last five years

• monitor and report publicly on energy markets and their functioning
• pro-actively prepare for regulatory change

• evidence that Canadian energy markets are working well
• application processing times are maintained or reduced

2001-2002

• Closely monitor the functioning of the natural gas market and produce annual assessments (e.g., Energy Market Assessments [EMAs] for natural gas). 
• Initiate public consultations on a comprehensive report on the outlook for energy supply, demand and pricing in Canada (the supply/demand report).
• Publish an Electricity EMA.
• Prepare for major regulatory events, including the expected filing of an application for a natural gas pipeline from the North.
• Explore and implement new regulatory approaches as appropriate (e.g. alternative dispute resolution).

• Publish the supply/demand report.
• Continue to pursue the EMA program.
• Implement new regulatory approaches as appropriate.
• Conduct a hearing on a natural gas pipeline from the North.

• Continue to pursue the EMA program.
• Continue to implement new regulatory approaches as appropriate.

Planning Context

The Board respects the rights of Canadians to be involved in decisions that affect them. It also recognizes that in order to effectively participate in Board matters, citizens need access to easy-to-understand, timely and targeted information. Effective participation by the public will enable the Board to hear a broad range of concerns and comments, ultimately resulting in better decisions.

To meet these needs, the Board's focus over the coming years will be to design communication and public engagement strategies that will promote public understanding and citizen engagement in its processes.

This year, the Board expects to implement the Electronic Regulatory Filing (ERF) initiative and to begin redesign of its Web site. Both of these initiatives will provide Canadians with improved electronic access to key Board information and regulatory processes. A valuable aspect of ERF is that it will enable regulated companies and intervenors to file submissions electronically and allow the public to participate on-line in the application process.

The Board believes that the pursuit of these actions over the planning period is consistent with, and supportive of, the Government On Line (GOL) strategy and Service Implementation Initiative.

Gaps

• flexibility in public engagement practices that meet the diverse needs of stakeholders 

• strategic approach to communications that ensures stakeholders are aware of Board responsibilities and regulatory processes

• quality baseline data for use in measuring changes in awareness, accessibility and satisfaction among stakeholders

Strategy

• enable Canadians to effectively participate in Board matters

Measure

• awareness, accessibility and satisfaction regarding Board information and processes

2001-2002

• Design and implement a Public Engagement Program that meets the diverse needs of stakeholders, particularly Canadians in Frontier areas.
• Design and implement a comprehensive communications strategy that will provide stakeholders with quality, consistent and timely information.
• Begin baseline monitoring to measure awareness, accessibility and satisfaction regarding Board information and processes among landowners.
• Introduce ERF, an initiative that will enable regulated companies and intervenors to file submissions electronically and allow the public to participate on-line in the application process.
• Begin redesign of the Board's Web site to meet federal government standards for GOL.

• Continue implementing the elements of the Public Engagement Program.
• Continue building baseline information from additional stakeholder groups to eventually measure awareness, accessibility and satisfaction.
• Roll-out the redesigned Web site.

• Fine-tune the Public Engagement Program so that it continues to meet the evolving needs of stakeholders.
• Enhance technological tools on an ongoing basis to improve communication and public engagement activities.
• Re-sample and report publicly on initial stakeholder satisfaction information.

Section IV: Joint Initiatives

Regulatory Initiatives

* The regulations noted here are those that are currently being worked upon at the National Energy Board and are expected to come into force over the three-year (2001 to 2004) reporting period of this Report on Plans and Priorities.

Table 4.2: Collective Initiatives

Section V: Financial Information

Table 5.1: Non-respendable Revenue

Table 5.2: 2001-2002 Net Cost of Program

Section VI: Other Information

List of Acts and Regulations

Below is a listing of Acts, Regulations, Rules and Guidelines under which the Board operates or has responsibilities.

Structure and Personnel

The Board is structured into five business units, reflecting major areas of activity: Applications; Commodities; Operations; Corporate Services and Information Management. These units are the equivalent of service lines in Treasury Board terminology. Three other units, Legal Services, Professional Leadership, and the Secretary of the Board, provide specialized services to the five business units.

Business Unit Descriptions

Applications

The Applications Business Unit is responsible for the processing and assessment of regulatory applications submitted under the NEB Act. These fall primarily under Parts III and IV of the NEB Act, corresponding to facilities, tolls and tariffs. Applications is also responsible for the financial surveillance and audits of NEB-regulated pipelines. The Business Leader of Applications is accountable for this Unit.

Commodities

The Commodities Business Unit is responsible for assisting the Board in fulfilling its mandate through energy industry and marketplace surveillance, including the outlook for the demand and supply of energy commodities in Canada, the updating of guidelines, and regulations relating to energy exports as prescribed by Part VI of the NEB Act. It is also responsible for the disposition of applications for exports of gas, oil and natural gas liquids, imports of natural gas and the disposition of applications concerning electricity exports and international power lines. The Business Leader of Commodities is accountable for this Unit.

Operations

The Operations Business Unit is accountable for safety and environmental matters pertaining to facilities under the NEB Act, the COGO Act and the CPR Act. It conducts safety and environmental inspections and audits, investigates accidents, monitors emergency response procedures, regulates the development of hydrocarbon resources in non-accord frontier lands, and develops regulations and guidelines with respect to the above. The Business Leader of Operations is accountable for this Unit.

Corporate Services

The Corporate Services Business Unit is responsible for providing those services necessary to assist the Board in its management of human, materiel and financial resources. The Business Leader of Corporate Services is accountable for this Unit.

Information Management

The Information Management Business Unit is responsible for developing and implementing an information management strategy for the Board and disseminates the information required by external stakeholders. The Business Leader of Information Management is accountable for this Unit.

Legal Services

The Legal Services Team provides legal advice for both regulatory and management purposes. General Counsel is accountable for this Team.

Professional Leadership

The Professional Leadership Team has the responsibility for maintaining and enhancing technical expertise within the Board in the economic, environment and engineering fields. Each of the three leaders is accountable for his or her respective professional field.

Secretary of the Board

The Regulatory Services Team provides high-level administrative and regulatory support. The Secretary of the Board is accountable for this Team.

Figure 2 NEB Organizational Structure

National Energy Board
444 Seventh Avenue SW
Calgary, Alberta T2P 0X8 

Internet: www.neb.gc.ca

Judith Snider
Vice-Chairman

Brenda Kenny
Business Leader, Applications

John McCarthy
Business Leader, Operations

Byron Goodall
Business Leader, Information Management

Michel Mantha
Secretary of the Board

Clients and Stakeholders

Companies under the Board's jurisdiction

• Group 1 Pipeline Companies
• Group 2 Pipeline Companies 
• Commodity Pipelines 
• Licence, order and permit holders

Federal Agencies

• Canadian Environmental Assessment Agency
• Environment Canada 
• Fisheries and Oceans 
• Canada Human Resources Development Canada 
• Indian and Northern Affairs Canada 
• Natural Resources Canada 
• Northern Pipeline Agency 
• Transportation Safety Board of Canada
• Mackenzie Valley Environmental Impact Review Board

Provincial Agencies

• Policy departments and energy regulatory agencies in all Canadian provinces

Offshore Boards

• Canada-Newfoundland Offshore Petroleum Board 
• Canada-Nova Scotia Offshore Petroleum Board

General Public

Landowners affected by pipeline construction and operations 

Shippers 

Industry Associations 

Non-Government Organizations