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Section III: Performance
In light of the low-level of activity in the Agency, there are no specific RPP commitments or parliamentary committee recommendations to be implemented.
On December 12, 2003, responsibility for the Agency was transferred from the Minister for Foreign Affairs and International Trade to the Minister of Natural Resources Canada. The Deputy Minister of Natural Resources Canada was appointed Commissioner.
3.1 Output Performance
In working toward realization of its strategic outcome, the Agency's principal task for
2006-2007 fiscal year was to maintain preparedness to respond to regulatory filings by Foothills and to make sure that the Actis properly administered. With the renewed interest in northern pipelines the Agency was called on to provide information in the event that the balance of the pipeline (Phase II) proceeded, including an examination of the commitments of the Government of Canada that are embodied in the Actand legislative changes that have occurred since the pipeline was certificated.
The agreements that are currently in place with NRCan and other government departments continued to facilitate efficiencies in the administration of the Act. An easement agreement exists among the Yukon Territory Government and the Agency to facilitate the collection of an easement fee related to land access rights on Indian Reserves and Crown land granted to Foothills for the pipeline. The Agency collected the annual fee of $30,400 on behalf of Indian and Northern Affairs Committee (INAC) and redistributed an appropriate share to the Yukon Territory Government. These transactions are excluded from the calculations of recoverable costs mentioned in Section 3.2 Financial Performance.
3.2 Financial Performance
3.2.1 Overview
In 2006-2007, the Agency had spending authority of $946,000. The spending authority was established in anticipation of a significant increase in the work of the Agency to support a high level of planning activity of the pipeline. All costs incurred are fully recovered from Foothills through a cost recovery mechanism. The company is in the process of resolving its commercial issues and has requested that the NPA clarify regulatory framework so that it may proceed quickly once commercial issues have been clarified. Foothills Pipe Lines Ltd. has not yet formally indicated its intention to act on its existing certificates, and the Agency’s expenditures fell far short of expectations.
Resources Used – Table 1
|
Northern Pipeline Agency Planned Spending $946,000 Total Authorities $941,254 2006-2007 Actual $390,864 |
Each year, the Agency's operating budget includes contingencies to mitigate any requirement to return to Parliament for increased funding in the event activity occurs related to either the existing portion of the pipeline, or construction of the balance of the pipeline. Agency operating expenditures are kept to a minimum unless Foothills initiates some action or formal request of the Agency, in which case operating expenditures may increase proportionately. As reported in the 2006-2007 RPP, an allotment was obtained for the second half of 2006-2007 to retain additional staff in response to an anticipated increase in activity by Foothills. This increase in activity did not occur and as a result these funds were not required and were not fully released.
3.2.2 Fixed and Variable Costs
The Agency's operating budget is comprised of fixed and variable cost elements.
Fixed costs relate to salaries for the NPA staff, the administration of the Leasehold Agreement by INAC and the office accommodations and area for information archives managed by Public Works and Government Services Canada.
As a consequence of the changes in the fixed cost portion, the variable costs of the Agency which relate to costs of service provided by NRCan increased slightly. NRCan’s cost of technical advice and administrative services can vary substantially depending upon the timing and magnitude of Foothills' activities.
3.2.3 Cost Recovery
Agency expenditures related to the administration of the Actare fully recoverable, including those costs related to services provided by other government departments and NRCan.
In accordance with Section 29(1) of the Act, the Agency recovers 100% of its costs based on the NEB's Cost Recovery Regulations. Cost recovery is based on an estimate and adjusted in future years upon completion of an audit of the actual costs. Foothills is responsible for full cost recovery based on quarterly billings from NRCan on behalf of the Agency. Details of cost recovery and the respective adjustments can be found in Table 2.
Cost Recovery - Table 2
Historical Comparison of NPA Cost Recovery
($ thousands)
|
2004 2005 2006 2007 2008 |
|
Estimated recoverable costs(1) 707 1,357 1,048 436 266
Actual recoverable costs(2) (415) (596) (445) - - ______________________________________
Adjustment in future year 292 761 603 - - |
|
Estimated recoverable costs 707 1,357 1,048 436 266 Adjustment for prior year (59) (382) (291) (760) (603) ______________________________________
Total cost recovery(3) 648 975 757 (324) (337) |
(1) a. Cost recovery – Table 2 is calculated on a calendar year basis.
b. Estimated recoverable costs are determined in accordance with section 6 of the National Energy Board Cost Recovery Regulations.
(2) Based on information available as of 10 August 2007. TheNorthern Pipeline Act stipulates that an audit be performed annually by the Auditor General of Canada. Information is not available until the completion of the audits for the corresponding calendar year.
(3) Figures for 2007 and 2008 represent amounts that will not be recovered from Foothills Pipe Lines Ltd. Future expenses will be credited against these amounts before future invoices are made.