It is my pleasure to present the National Energy Board’s (NEB or Board) Performance
Report for the period ending March 31, 2005.
The NEB’s main responsibilities are the regulation of interprovincial and
international natural gas, oil and commodity pipelines, international electric
power lines and energy exports. In addition we monitor and report to the
government and the public on the functioning of energy markets. We also regulate
the safety, environmental and conservation aspects of energy exploration and
development on federal lands in the North and offshore areas where there are no
specific accords or agreements with a province or a territory.
Over the past few years we have developed a performance framework that is
consistent with the premise for reporting described in Canada ’s
Performance 2003. Our report is organized according to our five corporate
goals, which indicate the outcomes we are focused on achieving. Our strategies
and major actions are designed to move us toward these goals, and we have
developed performance measures in order to monitor our progress.
Our first goal relates to the safety and security of NEB-regulated
facilities. The Board plays a significant role in safety by ensuring that a
regulatory framework which encourages companies to maintain or improve their
performance is in place and in line with public expectations. The Board has set
a target of zero ruptures per year on our regulated pipelines and this was met
in 2004. The Board continues to study ruptures and their causes with an eye
toward determining where regulatory interventions could improve safety.
While we do not have a target for pipeline incidents, we are pleased to report
that the total incidents remain within the same range as the previous four
years. A landowner survey conducted in 2004 showed that the majority of
landowners feel safe living and working near NEB-regulated pipelines.
Our second goal relates to the protection of the environment and respecting
the rights of those affected by the activities of regulated companies. The Board
has continued to track environmental conditions attached to facility approvals
for effectiveness. In 2004-2005, 95 percent of the conditions for which a result
was available had attained their desired end result. A landowner complaint
process was developed to provide a consistent and timely process for resolution
of landowner complaints.
Our third goal provides for Canadians to derive the benefits of economic
efficiency. Economic efficiency requires that energy and transportation markets
are working well. With respect to the hydrocarbon transportation system, the
Board’s assessment indicates that there was adequate capacity to deliver
energy to Canadians and export markets; shippers were generally satisfied with
the services they received; and the pipelines were financially sound.
Taken together, these measures indicate that the transportation sector performed
well for Canadians. A second performance indicator under this goal is that
prices paid for natural gas in the domestic market are at least as favourable as
those available to the export market. This was the case during the reporting
period.
In 2004-2005, a number of oral hearings held by the Board focused on the cost
of service and cost of capital matters. The Board’s decisions in these areas
have provided clarity and enable industry to move forward.
In keeping with our monitoring activities, the Board released six in-depth
reports on energy supply and demand in Canada in 2004-2005. The report on
the British Columbia natural gas market and natural gas prices indicates that
the B.C. market is functioning well and that market participants are responding
as expected. The Board released Canada ’s Oil Sands:
Opportunities and Challenges to 2015 , which outlines the potential oil
resources in the oil sands and discusses the major issues that could impact the
development of those resources in the years to come. The Board also worked
with the Alberta Energy and Utilities Board to produce Alberta’s Ultimate
Potential for Conventional Natural Gas, the first joint study undertaken
with a provincial regulator.
Our fourth goal supports the NEB in meeting the evolving needs of the public
to engage in Board matters. Over the past year, the Board actively engaged
Canadians through processes such as the development of regulations, Energy
Market Assessment reports, public information sessions and public hearings.
The Board also enhanced its Aboriginal engagement efforts through internal
capacity building and tools with respect to Aboriginal culture and engagement
practices.
The NEB’s fifth goal is focused on management accountabilities and
workplace excellence to achieve results. In 2004-2005, the NEB
undertook a number of initiatives to support continual improvement, including an
ISO-based management framework; the integration of business and human resource
plans; a refined competency framework; and a new performance evaluation process.
All of these initiatives support the Government of Canada’s emphasis on Results
for Canadians , and the Board’s ongoing focus on improving efficiency and
effectiveness.
The Board's commitment to efficient and effective regulation and security
continues and crosses all of its goals. Regulatory clarity has been
improved over the past year, particularly in the areas of communication and
process clarity. Specific examples include the development and implementation of
a consolidated Filing Manual and an Environmental Screening Guidance Manual; the
development of the Environmental Issues Briefing Tool;and the completion of the
Federal Authority Participant Role to support federal authorities in meeting
their Canadian Environmental Assessment Act responsibilities.
In conclusion, I believe that we continue to progress in achieving our goals
and providing significant value to Canadians. We are committed to monitoring our
progress and continually improving our program delivery for the benefit of
Canadians.
Kenneth W. Vollman
Management Representation Statement
I submit, for tabling in Parliament, the 2004-05 Departmental
Performance Report (DPR) for the
NATIONAL ENERGY BOARD
This document has been prepared based on the reporting principles
contained in the Treasury Board of Canada Secretariat's Guide for the
Preparation of 2004-2005 Departmental Performance Reports and, to the
best of my knowledge,
- adheres to the specific reporting requirements;
- uses an approved Business Lines structure;
- presents consistent, comprehensive, balanced and accurate
information;
- provides a basis of accountability for the results pursued or
achieved with the resources and authorities entrusted to it; and
- reports finances based on approved numbers from the Estimates and
the Public Accounts of Canada
Name: ________________________________
Kenneth W. Vollman
Title: Chairman ________________________
Date: ________________________________
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The National Energy Board’s corporate purpose is to promote
safety, environmental protection and economic efficiency in the Canadian
public interest [1]
within the mandate set by Parliament in the
regulation of pipelines, energy development and trade.
The National Energy Board’s vision is to be a respected leader in safety,
environmental and economic regulation.
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The National Energy Board (NEB or Board) is an independent regulatory
tribunal established in 1959. It reports to Parliament through the Minister of
Natural Resources. The Board is a court of record and has the powers of a
superior court with regard to compelling attendance at hearings, the examination
of witnesses under oath, the production and inspection of documents, and the
enforcement of its orders. The Board's regulatory decisions and the reasons for
them are issued as public documents.
The main functions of the NEB are established in the National Energy Board
Act (NEB Act). These include the regulation of interprovincial and
international natural gas, oil and commodity pipelines, international and
designated interprovincial electric power lines, exports of oil, natural gas and
electricity and imports of oil and gas. 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. The Board also has specific
responsibilities under the Northern Pipeline Act .
The NEB’s regulatory responsibilities for public safety and protection of
the environment are set out in the NEB Act and the COGO Act. The NEB is required
to meet the requirements of the Canadian Environmental Assessment Act (CEA
Act) and the Mackenzie Valley Resources Management Act . In addition, NEB
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 Board’s mandate includes the provision of expert technical advice to
the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB), the
Canada-Nova Scotia Offshore Petroleum Board (C-NSOPB), Natural Resources Canada
(NRCan) and Indian and Northern Affairs Canada (INAC). 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.
In 2004, the NEB amended its vision statement to include the words protect
and enable : The NEB will be a respected leader in energy
regulation that protects and enables in the Canadian public interest (NEB
Strategic Plan 2005-2008). This change provides clarification that the NEB
will regulate in a way that prevents negative impacts of energy development
while encouraging desirable outcomes in the interest of Canadians. The NEB
promotes the safety and security, environmental protection and fair treatment of
those affected. The Board strives to be a leader in energy regulation that
generates benefits, responds in a timely manner to changing needs and enhances
the conditions for competitiveness and innovation in Canada.
The NEB amended its corporate purpose statement in
2004-2005 in order to include the word security to reflect amendments
being made to the NEB Act. On 6 May 2004, the Public Safety Act , 2002
(Bill C-7) was proclaimed and received Royal Assent. An Order of the Governor
General in Council fixed 20 April 2005 as the day on which the sections amending
the NEB Act came into force. The amendments provide the NEB with a clear
legislative authority for the security of pipelines and international power
lines.
Table 1: NEB Responsibilities
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Regulatory
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Advisory
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To regulate, in the public interest, those areas of the oil, gas and
electricity industries relating to:
Construction and operation of pipelines;
Construction and operation of international and designated
interprovincial power lines;
Transportation, tolls and tariffs of pipelines;
Exports of oil, gas and electricity and imports of oil and gas;
Oil and gas activities on frontier lands not subject to a
federal/provincial accord.
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To provide advice to the Minister of Natural Resources on the
development and use of energy resources by:
Monitoring the energy sector;
Providing advice to the federal government;
Issuing public reports.
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Additional information on the NEB’s background and operations may be found
on the NEB Web site (www.neb-one.gc.ca).
Companies regulated by the NEB create wealth for Canadians through the
transport of oil, natural gas and natural gas liquids (NGLs), 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
proceed in an efficient manner when they are in the public interest. Through its
corporate goals, the NEB strives to ensure public safety, maximize economic
benefits, protect the environment, and respect the rights of those affected by
energy facilities and activities under the Board’s jurisdiction.
Energy Overview
In 2004, world energy prices increased significantly and Canadian energy
markets were characterized by notable adjustments in the balances between energy
demand and supply. For example, in spite of a record number of natural gas wells
drilled in a year, there was only a slight increase in production from the
WesternCanadianSedimentaryBasin. Crude oil markets in Canada saw the continuing
expansion of production from the East Coast and the oil sands.
The increase in oil sands production has strained the existing oil pipeline
systems and several expansion proposals are being considered. In electricity
markets, reserve margins have declined in some regions increasing the need for
new electricity sources and highlighting reliability concerns.
The resulting effect has been high and volatile energy prices and a search by
industry for new sources of energy supplies including natural gas from frontier
areas, the development of unconventional natural gas sources, LNG, an increased
number of oil sands projects and the rapid development of wind-generated
electricity projects. Much of the Board's work in 2004-2005 focused on
monitoring, preparing for and responding to these changes.
Smart Regulation
The 2004 Speech from the Throne renewed the 2002 federal government
commitment to efficient and effective regulation as a key strategy in
maintaining a Canadian advantage in a globally competitive world. An External
Advisory Committee on Smart Regulation examined Canada’s regulatory framework
and produced a report recommending changes in Canadian regulatory strategy given
the rapid pace of commerce, increasing complexity of policy issues,
globalization and rising public expectations. In 2004-2005, the NEB continued
several initiatives consistent with the Smart Regulation strategy. These
initiatives are designed to focus resources on issues that matter most to our
stakeholders, provide consistent regulatory approaches, clarify timelines and
reduce cycle times, cooperate with other regulatory agencies in the interest of
streamlining project assessment, and provide clarity to project applicants.
Specifically, the Board focused its efforts on providing efficient and effective
regulation by:
- advancing the use of goal-oriented regulation;
- processing applications in an efficient and timely manner, while
diligently fulfilling its responsibilities to protect the public interest;
- involving Canadians in numerous forums regarding regulatory development
and energy markets;
- reviewing its processes, engaging in dialogue with stakeholders,
clarifying expectations, implementing new approaches, and preparing for
major applications; and
- negotiating with other agencies to ensure that regulatory processes are
harmonized to minimize duplication.
The NEB Results Framework is based on five Business Units contributing to the
realization of one strategic outcome.
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The National Energy Board’s strategic outcome is to provide
Canadians with social and economic benefits through the regulation of
specific parts of the Canadian energy industry (oil, gas and electricity).
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This outcome is the result of all of the ongoing activities of the NEB. In
support of the strategic outcome, the NEB has developed five strategic goals.
The strategies, measures and major actions for each goal, as outlined in the Report
on Plans and Priorities 2004-2005 (RPP), represent the focus on performance
reporting at the NEB. The results framework is depicted as follows:
Figure 1: Managing for Results Framework
Click on image to enlarge
The National Energy Board program constitutes one business line, Energy
Regulation and Advice, focused on realizing a single strategic outcome. The
resources used to achieve this outcome for fiscal year 2004-2005 are summarized
below; approximately 90% of this is cost-recovered from regulated companies.
Table 2: Resources Used
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National Energy Board 2004-2005
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Planned Spending
Total Authorities
2004-2005 Actual
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$35.8 million
$39.0 million
$38.1 million
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300.6 FTEs [2]
--
299.6 FTEs
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Strategic Outcome
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Priorities
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Associated Resources ($ millions)
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Key Results
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Further information
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Provide Canadians with social and economic benefits through the
regulation of specific parts of the Canadian energy industry (oil, gas and
electricity).
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Goal 1 – NEB- regulated facilities and activities are safe and
perceived to be safe.
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6.1
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Number of pipeline ruptures: 0
Number of pipeline incidents: 52
Number of fatalities: 0
Landowner survey results (May 2004): Majority of landowners feel
safe living and working near pipelines
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Section 2.1
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Goal 2 – NEB-regulated facilities are built and operated in a manner
that protects the environment and respects the rights of those affected.
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4.9
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Environmental conditions that achieved their desired end results: 95%
Number of major liquid hydrocarbon releases into the environment: 1
release (into secondary containment at plant)
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Section 2.2
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Goal 3 – Canadians derive the benefits of economic efficiency.
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9.5
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Evidence that Canadian energy and transportation markets are working
well
Average cycle time for non-hearing facilities applications: 38 days
(down from 62 in previous year)
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Section 2.3
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Goal 4 – The NEB fulfills its mandate with the benefit of effective
public engagement.
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2.2
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Level of stakeholder satisfaction with process, information and
interaction with the NEB: approximately 80%
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Section 2.4
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Goal 5 – The NEB is effective in leading its people and managing its
resources.
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15.4
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Employee satisfaction: 88%
Per capita cost of regulation: $1.07 per year
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Section 2.5
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There were no parliamentary committee reports issued concerning the NEB
during the reporting period.
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