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Section II

Analysis of Program Activities by Strategic Outcome

2.1 Strategic Outcome

Safety, security, environmental protection and economic benefits through the regulation of pipelines, power lines, trade and energy development within NEB jurisdiction

The NEB has five integrated expected results, or goals, for its Energy Regulation and Advice program:

• 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 and respects the rights of those affected
• Canadians benefit from efficient energy infrastructure and markets
• The NEB fulfills its mandate with the benefit of effective public participation
• The NEB delivers quality outcomes through innovative leadership and effective support processes

Together, the goals provide the framework of expectations for the Energy Regulation and Advice Program, and ultimately how the NEB will achieve its strategic outcome. The goals have related performance measures and indicators to evaluate progress and performance towards achieving the goal.

As part of its measurement plan, 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 Activity: Energy Regulation and Advice

Program Activity: Energy Regulation and Advice Program

2008-09 Financial Resources ($ millions)			2008-09 Human Resources (FTEs)
Planned Spending	Total Authorities	Actual Spending	Planned	Actual	Difference
47.4	55.0	50.4	354.6	326.8	-27.8

Energy Regulation and Advice Program

Performance Indicators	Targets	Performance Summary
Energy Regulation and Advice Program
Percent of planned risk-based compliance activities completed	100% of planned compliance activities are completed	Performance Status: Mostly Met 83% of planned activities (as per the 2008-2009 Compliance Verification Plan) were completed. Completed planned activities by management area: Emergency 90%, Environment 79%, Integrity 76%, Safety 75%, and Security 100%. The NEB was not able to complete all planned work due to the need for additional compliance activity resulting from company requests and actions, or findings from planned compliance activities.
Public perception of pipeline safety	Establish a baseline for public perceptions of pipeline safety	Performance Status: N/A Planning for baseline data acquisition for 2009-2010.
Companies regulated by the NEB have safety, integrity and environmental management systems and programs	Companies with high risk facilities have safety, integrity and environmental management systems and programs	Performance Status: Mostly Met Risk-based lifecycle approach directs NEB oversight to those companies/systems where regulatory risk is highest. Significant NEB field presence and interactions with companies indicated that most are effectively managing safety, security and environmental protection on their systems, although some companies lack fully matured management systems for integrity management programs.
Expected Result: NEB-regulated facilities are built and operated in a manner that protects the environment and respects the rights of those affected
Environmental conditions achieve their desired end results	Environmental conditions achieve their desired end results	Performance Status: Met All Consistently at or near 100% (all environmental conditions met by companies) for 2+ years.
Percentage of landowner complaints resolved Rights of way are reclaimed within expected timeframes	80% of complaints resolved within 60 calendar days	Performance Status: Somewhat Met 23 complaints received: an increase from 2007-2008 (13). The majority of all landowner complaints are still successfully resolved by companies without NEB involvement. Resolution times depend on file complexities and are typically longer than 60 days (process effectiveness indicators are under development in 2009-2010). Rights of way: project to develop NEB program and measures underway.
Expected Result: Canadians benefit from efficient energy infrastructure and markets
Client satisfaction with energy information products and workshops	Majority of clients are satisfied	Performance Status: Met All Feedback on products and workshops generally positive and most users indicate they value the information provided. 505,636 web visits in 2008-2009 to energy information products (8% increase over 2007-2008).
Percent of planned financial regulatory audits completed	100% of planned financial regulatory audits are completed	Performance Status: Met All All three planned financial regulatory audits were completed.
The Board’s regulatory processes are measurably efficient and effective	All NEB service standards for its regulatory services are met	Performance Status: Mostly Met 80% of service standards met (15 of 18) Details on service standard performance are provided in Section III.
Expected Result: The NEB fulfills its mandate with the benefit of effective public participation
Stakeholder satisfaction with NEB processes and information	Majority satisfied to very satisfied	Performance Status: Mostly Met 80% of stakeholders involved in five NEB hearings in 2008-2009 were satisfied overall with processes and information. Board Members were also surveyed for satisfaction with NEB public engagement processes. Of Board Members surveyed, all believed appropriate measures were taken to engage affected parties.
Expected Result: The NEB delivers quality outcomes through innovative leadership and effective support processes
Percentage of planned results delivered within budget	Budget within 4% of planned allocation	Performance Status: Met All Less than 2% variance from planned allocation based on factors within the NEB’s control.
NEB employees are satisfied with workplace conditions	85% of NEB employees indicate that the NEB is a good place to work	Performance Status: Mostly Met 79% of NEB employees would recommend the NEB as a good place to work (2008 Public Service Employee Survey).

Benefits for Canadians

In 2008-2009, the NEB continued to promote a safe, secure and economically efficient energy infrastructure that is built and operated in a manner that protects the environment. By using a goal oriented approach to regulation, the NEB sets expectations for industry to achieve and follows-up with compliance, outreach and performance monitoring activities. A goal oriented approach allows the NEB to define the outcomes it expects the companies it regulates to achieve, but allows the companies to decide the best way to achieve these outcomes, encouraging both innovation and cost effective solutions. The risk-based lifecycle model allows the NEB to effectively target its oversight and compliance activities to companies where regulatory risk is highest.

The NEB also increased its focus on ways to achieve better outcomes from its regulatory decisions and processes for all Canadians. NEB staff engaged in initiatives designed to enhance public consultation on the impact of projects and energy infrastructure. Partnerships were leveraged to improve regulatory efficiency and effectiveness and reduce overlapping regulatory requirements.

The NEB contributes to Canada’s sustainability by creating a regulatory framework that balances economic, environmental and social dimensions of the facilities and the activities it regulates in the public interest. Federally regulated systems transport over $100 billion worth of energy annually to markets in Canada and elsewhere. Regulated companies create wealth for Canadians through jobs, taxes and the export of hydrocarbons and electricity. The Canadian energy industry accounted for seven per cent of Canada’s GDP in 2008, and directly employed 363,000 people (two per cent of the Canadian labour force). In 2008 the revenue from energy exports from Canada exceeded $133 billion, the majority of which was exported via NEB-regulated systems. Energy exports accounted for 28 per cent of the value of all Canadian exports.

Providing energy advice, information and market monitoring contributes to efficient Canadian energy markets, and sustainable economic growth for Canada, by allowing policy makers, industry and the Canadian public to have access to expert knowledge and energy market information so that they can make informed choices about energy 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.

Performance Analysis

The NEB analyzes its performance and progress towards its Strategic Outcome by evaluating the results of its measures and planned objectives outlined in the 2008-2009 Report on Plans and Priorities, and the circumstances impacting these 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 and respects the rights of those affected

Safety and the Environment

The Board asks companies to share their performance data related to occupational injuries, hours of work and leaks and spills. Companies are required to report all incidents as defined in the NEB’s regulations. This data is used by the NEB to analyze industry performance.

Overall, the pipeline industry continues to be a safe mode of transportation for the delivery of energy to Canadians. However, recent industry trends are of concern to the NEB:

• There were two fatalities on NEB regulated pipelines in 2008 which is above the 5-year average. The NEB’s target is zero fatalities. There were also two disabling injuries on NEB regulated pipelines in 2008. The frequency of disabling injuries was 1.0 per million hours worked in 2008, up from 0.65 million hours worked in 2007;
• There were no pipeline ruptures in 2008, which is a decrease from the two which occurred in the previous year;
• Incidents and crossing violations were significantly higher in 2008. There were 56 incidents, such as worker injuries, unintended gas leaks, pipeline ruptures or fatalities, in 2007, which increased to 71 in 2008. The 5-year average is 52. The cause of these incidents, such as corrosion, component failure and outside forces, all rose in 2008. Crossing violations, which are intrusions within the 30 metre safety zone or onto a right of way without the pipeline company’s permission, were up 88 per cent from 2007.

There are a number of potential reasons behind these trends:

• A very high level of construction activity in 2008 with new and more complex projects. Construction levels contribute to worker fatigue due to tight construction schedules, resource restraints and inadequate training.
• A very competitive construction labour market with high turnover impacted the level of worker experience and skills. Although these pressures have been easing somewhat due to the economic downturn at the end of the year, labour access and retention were challenging issues for much of the year.
• Increased reporting from companies on incidents and issues due to improved management systems. Effective use of company management systems allows companies to record and track issues and their responses in greater detail, and provides learnings to help avoid repeated incidents.

The NEB takes these trends very seriously and conducted investigations and follow-ups to ensure compliance and remedial actions were taken. Injury and fatality investigation findings were also shared with companies so safety programs could be reviewed and improved. The NEB is also analyzing industry trends to determine what further enhancements to its compliance programs, communication tactics and outreach plans on compliance expectations, will help to positively impact trends.

There has been some improvement in the amount of hydrocarbons unintentionally released into the environment. There were no major oil releases (greater than 100 m3) in 2008, but there were 22 natural gas releases in 2008, up from the four year average of 20. There were 21 released of 100 L or more of hydrocarbons or other contaminants reported under the COGO Act (from oil and gas exploration and production facilities located in the Northwest Territories or Nunavut), which is below the previous four-year average of 28. Minor oil releases (between 1.5 m3 and 100 m3) from NEB regulated pipelines were up somewhat this year after a three-year downward trend but were close to the four-year average

When the NEB approves an application, the Board attaches conditions to the approval to address specific environmental issues associated with a project. The NEB then monitors the project to ensure these environmental conditions are met and to assess the need for improving the clarity and effectiveness these conditions. Companies are meeting environmental conditions defined by the Board on almost all projects. The results reflect the investment that the NEB has made to improve the relevance and effectiveness of its regulatory conditions and the internal tools and processes that guide the use of conditions in facilities regulation. The Board’s compliance staff report that most construction projects showed good environmental performance. The few instances where environmental conditions were not met in 2008-2009 mainly related to post construction environmental reports not being filed within the timelines required. The NEB followed-up with these companies to ensure that conditions were met and the reports are now filed.

A detailed analysis of pipeline performance relating to safety and the environment is provided in the NEB’s 2009 report Focus on Safety and Environment: A Comparative Analysis of Pipeline Performance, 2000-2007.

Building a Safety Culture

The NEB’s commitment to regulatory oversight applies to the entire lifecycle of a pipeline or facility, from application to abandonment. Compliance activities allow the NEB to assess the level of risk associated with a facility as well as the company’s performance in managing risk through its management programs during construction, operation and abandonment. Compliance activities include inspections, audits, emergency exercises and compliance verification meetings with companies. Compliance activities are one way the NEB influences positive outcomes in safety, security and the environment within the industry.

In 2008-2009 the NEB completed 83 per cent of its planned compliance activities related to safety, security, integrity, environment and emergency management. The NEB was not able to complete all planned work due to the need for additional compliance activities resulting from company requests and actions, or findings from planned compliance activities. These 105 unplanned activities, such as inspections or meetings with company representatives, required significant employee time to address. Problems with the electronic tool used for compliance data tracking and planning purposes also led to some intended activities not being properly scheduled. The NEB has taken steps to correct these data issues and the omitted activities have been included in the 2009-2010 compliance work plan.

In addition to the compliance activities, the NEB also received 240 reports of incidents and pipeline crossing violations that required various degrees of follow-up, assessment and recording. Employees continued to spend considerable time in the field monitoring operational pipeline systems despite increased work loads related to the high level of construction.

In addition to compliance and monitoring activities, NEB staff also conducted a number of outreach activities in 2008-2009, such as workshops, discussions with regulated companies and pipeline organizations, and sharing the findings from investigations in order to increase awareness of safety concerns. Continued outreach and communication is required to ensure regulated companies understand the NEB’s expectations and how to improve their performance related to safety and environmental issues.

Findings from the significant amount of NEB field activities and company interactions showed that most companies understand what is required to meet compliance expectations and are effectively managing safety, security and environmental protection on their facilities through their management systems. Where company performance was not adequate, the NEB worked with the companies to help them understand where their performance needed to be improved and what actions were required to achieve compliance.

Continued Development of the Risk-Based Lifecycle Approach

In 2008-2009 the Board was committed to further development and delivery of the risk-based lifecycle approach. New compliance tools such as the pre-construction evaluation were introduced in 2008. Work continued on developing company performance scorecards and advancing the risk model. Continued enhancements and implementation will require significant resources and information technology solutions.

The Human Environment

A draft plan for incorporating socio-economic and land matters into the risk-based lifecycle approach, including toll and tariff regulation, was not implemented in 2008-2009. The plan was rescheduled to 2009-2010 to appropriately scope and resource this component, following the successful completion of the Land Matters Consultation Initiative.

Security Management

In addition to providing regulatory oversight to ensure that companies and operations under the Board’s jurisdiction are protected against threats, the NEB also leveraged partnerships to coordinate messages on security. It partnered with the Royal Canadian Mounted Police, Public Safety Canada, Natural Resources Canada, the Canadian Energy Pipeline Association and the Canadian Association of Petroleum Producers to produce a security brochure promoting suspicious incident reporting around pipeline facilities. A contact list for all regulated companies was also developed to enable information sharing in the event of a significant security event.

The NEB has been working since 2006 with the Canadian Standards Association and security experts to draft a security management standard (CSA Z246.1) for the petroleum and natural gas industry. The objective of this standard is to assist and guide the industry as they develop and implement security management programs. The standard was approved in May 2009.

Updating Energy Information Systems

As part of its 2008-2009 commitments, the NEB launched an online database identifying underground formation tops on Frontier lands. The initiative was conducted in partnership with the Geological Survey of Canada, the Northwest Territories Geoscience Office and the Nunavut Minerals and Petroleum Resources Branch. The database, which provides industry with consistent, timely and valued information, includes formation names and depth by well location using North American Datum (NAD83) location descriptions.

The NEB also moved forward on developing a process to convert Frontier Information Office reports from microfiche to a web-based digital format. Without access to this data, companies could be forced into undertaking exploration programs to gather information that is already known. The benefits of making this data more widely available include reducing unnecessary exploration and the costs, both financial and environmental, associated with it. A web portal was developed in 2008-2009 which will allow new reports to be saved and stored in a digital format. The Board has also investigated the cost for converting microfiche reports from previous years to a digital format and developed the scope for this project. However, resources are needed for this project to proceed.

Protecting the Environment

Many of the results the NEB achieved in 2008-2009 regarding its environmental regulation were related to improved partnerships. The NEB enhanced its engagement efforts with government and non-government organizations to improve communication, streamline and improve processes and promote understanding of environmental issues and the influence of the NEB on environmental outcomes.

The NEB made progress on establishing relationships with Environmental Non-Governmental Organizations (ENGOs), by meeting with a number of groups across the country to share information about the NEB, and to seek their views on how to improve the environmental outcomes of NEB regulatory programs.

The Board’s contributions to the Major Projects Management Office (MPMO) resulted in process improvements, including project agreements to better coordinate environmental assessment processes and requirements, and an enhanced Aboriginal engagement program.

A project to improve environmental reporting on the condition of rights of way was also initiated during 2008-2009, which will help to clarify the NEB’s expectations with respect to environmental conditions and how well the industry is meeting these expectations.

Respecting the Rights and Interests of Those Affected

The Board completed a major consultation initiative, the Land Matters Consultation Initiative (LMCI) in 2008-2009. Over 400 stakeholders were engaged, including landowners, Aboriginal groups, municipal representatives, oil and gas companies and other government departments. The LMCI provided a forum for discussion on land matters to help improve understanding of issues and find new ideas to improve the way these issues are incorporated into the NEB’s public interest considerations.

The LMCI was divided into four streams: company interactions with landowners, improving accessibility of NEB processes, pipeline abandonment (financial issues) and pipeline abandonment (physical issues). NEB employees met with people and groups affected by pipelines to hear their suggestions for improvement. Concerns about financial issues were heard at a public hearing in January 2009, making the NEB the first oil and gas regulator to explicitly address the financial aspects of pipeline abandonment.

As one result of LMCI consultation, the NEB will extend its regulatory program in 2009-2010 to include respecting the rights and interests of those affected by energy infrastructure as part of its regulatory framework, in order to provide consistent processes, guidance on expectations and to monitor performance.

Landowner Complaints

Energy companies regulated by the NEB are expected to involve those affected by their facilities and respond to complaints and concerns. While the majority of complaints in 2008-2009 were resolved without NEB involvement, the NEB can assist both sides by facilitating the resolution of complaints. The NEB received 23 landowner complaints in 2008-2009 on issues ranging from land reclamation to inadequate consultation, an increase of 10 complaints over the previous year. This rise in complaints was anticipated due to increased landowner awareness of their rights and the NEB’s role stemming from the LMCI. The construction of the Alberta Clipper and Southern Lights projects also resulted in a number of operational complaints by landowners.

The value of the NEB’s performance indicator on landowner complaint resolution time was reviewed in 2008-2009. As a result, it was determined that better indicators should be developed in 2009-2010 to assess its effectiveness in facilitating landowner complaint resolution, and on the outcomes of this process.

Canadians benefit from efficient energy infrastructure and markets

The NEB promotes efficient energy infrastructure and markets by regulating pipeline and electrical transmission facilities, pipeline tolls and tariffs, and energy imports and exports. The NEB is also required to provide energy information to Canadians and works to continually improve the efficiency of its regulatory processes.

Energy Infrastructure and Markets

The basis of the NEB’s approach for authorizing exports is to ensure that Canadians have access to Canadian-produced energy commodities on terms and conditions at least as favourable as those available to export buyers. To evaluate this, the NEB extensively monitors the market and reports on its findings. In 2008-2009 Canadian market prices remained well connected to continental prices and Canadians continue to pay fair market prices for oil, natural gas, and electricity.

For natural gas and oil pipeline transportation systems to work well, there must be adequate pipeline capacity in place to move products to consumers who need them. Furthermore, pipeline companies must have adequate financial strength to attract capital on terms that allow them to build infrastructure, maintain their systems, and provide services at a reasonable cost.

• Capacity utilization indicators show there was adequate oil and gas pipeline capacity in 2008-2009, although periods of apportionment (reduced shipper volumes) on some oil pipeline systems indicate that overall oil pipeline capacity remained tight. Apportionment can be caused by factors such as growing supply, increased demand, pipeline reconfigurations, and reduced pipeline capacity or refinery maintenance.
• Additional capacity from the completion of oil pipelines currently under construction will help alleviate constraints on oil pipelines. The effects of the global economic downturn, including expectations of slower oil production growth and low commodity prices may result in a surplus of capacity in the coming year. In addition, competition from sources of natural gas, particularly in the western and southern U.S., resulted in reduced flows on pipelines transporting gas from western Canada. Changing supply and demand dynamics may have important implications for both new and existing pipeline systems, which could prove to be challenging.
• The pipeline sector in 2008 was financially sound. Credit ratings continued to be investment grade and key financial ratios remained stable.
• In the 2008 pipeline services survey, shippers indicated they were reasonably satisfied with the services pipeline companies provided, which is consistent with results over the past few years. Physical reliability, timeliness and accuracy of invoices and statements received the highest levels of satisfaction, whereas satisfaction with pipeline companies exhibiting an “attitude of continuous improvement and innovation” was lowest.

The NEB published a detailed analysis of energy markets and transportation in the 2009 Canadian Pipeline Transportation System Assessment Report.

Energy Information

The NEB collects and analyzes 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 that helps policy makers, industry and Canadians make better decisions.

Energy information products posted on the NEB website had over a half a million visits in 2008-2009, an eight per cent increase over the previous year. Energy Futures, a study of Canada’s long-term energy supply and demand, and Energy Information for Canadian Consumers, consumer-focused information on energy pricing, continue to be the most used information products. The NEB also organized the Energy Futures Conference, to discuss the results of its 2007 Energy Futures publication.

Satisfaction with the NEB’s energy information products and workshops is generally high and the NEB seeks to continually improve the energy information it provides to ensure it is relevant, timely and useful to Canadians.

Effective and Efficient Regulatory Services

The NEB continues to monitor the effectiveness and efficiency of it regulatory processes. In 2008-2009, the NEB experienced the highest hearing workload in its history, with seventeen public proceedings. The Board also successfully assumed jurisdiction of the TransCanada Alberta System in April 2009, showing the organization to be both adaptable and responsive in preparing for a sudden 50 per cent increase of pipeline requiring regulation. The Board anticipates further work in transitioning the TransCanada Alberta System, including landowner and industry outreach and the possibility of a large number of toll-related issues coming before the Board in the next year.

Service standards on key regulatory processes, established in 2005, are used to help identify areas requiring process efficiencies. The NEB met or exceeded almost all of its service standards, despite a heavy workload. Processes and standards are being reviewed to better understand where improvement, and further development of relevant and meaningful service standards, can be made. A report on 2008-2009 service standard results is provided in Section III.

Partnerships to Improve Regulatory Efficiency and Effectiveness

One of the NEB’s objectives in 2008-2009 was to improve regulatory efficiency and effectiveness by building and strengthening partnerships. The NEB met this objective through a number of partnership initiatives, including the following:

• The MPMO was established by the Government of Canada in 2007 to improve coordination between federal agencies involved in approving major projects such as new pipeline construction. The NEB worked with the MPMO and other federal agencies and stakeholders to develop policies, procedures and guidelines for a more coordinated and efficient approach to the federal regulatory review process.
• The NEB signed several Memoranda of Understanding (MOUs) to increase understanding and reduce regulatory overlap. For example, the Board signed an MOU with the Northwest Territories (NWT) Water Board regarding down-hole injection of drilling related fluids. This MOU strengthened the NEB’s relationship with northern boards, removed unnecessary regulatory overlap, and helped to attract interest from other northern boards in building partnerships to achieve outcomes such as those outlined in the Northern Regulatory Improvement Initiative.
• Participating in the NWT Board Forum provided an opportunity to both share and gain knowledge about energy regulation in the North.
• Board staff participated in a joint data initiative with Environment Canada and Natural Resources Canada that examined Canadian energy data, resulting in greater consistency of data used by federal departments and relationships to continuously improve energy data available to Canadians in future.
• NEB staff continued to meet with Mexican and US federal regulatory agencies as part of an agreement that commits the three parties to share information on regulatory approaches and developments.

Regulatory Initiatives

In 2008-2009 the NEB introduced a new online application system that allows companies to build and submit section 58 applications (for a facility involving less than 40 km of new pipeline) through the NEB website. The online system improves the efficiency of the regulatory process and simplifies the review process.

The Board also continued to pursue regulatory amendments that will improve the efficiency and effectiveness of energy regulation in Canada. The Board delegated some responsibilities under the Canadian Petroleum Resources Act to the NEB’s Chief Conservation Officer (CCO), allowing the CCO to handle the investigation phase of applications for significant discovery and commercial discovery in frontier areas under the Board’s jurisdiction. Amendments drafted by the Board to the Onshore Pipeline Regulations, 1999 and the National Energy Board Processing Plant Regulations came into effect in 2008-2009, allowing the NEB to assess the environmental effects of decommissioning.

The NEB fulfils its mandate with the benefit of effective public participation

The NEB has made significant progress towards enhancing its engagement strategies over the past few years, and this continued in 2008-2009. Community engagement and pre-hearing meetings are considered standard for facilities applications having any significant degree of public interest.

An initiative began in 2008-2009 to strengthen relationships with ENGOs, which has resulted in better understanding and communication about the NEB’s role in environmental oversight.

The NEB has developed a culture of reaching out to communities and helping them participate in NEB processes. The NEB developed a new model for Aboriginal engagement and very quickly built up its knowledge and capacity to pursue enhanced engagement on hearings such as Keystone XL, Northern Gateway and Groundbirch. The new model recognizes the unique traditions and needs of Aboriginal peoples in the regulatory process. Enhanced engagement provides proactive contact with Aboriginal groups that may be affected by a proposed project, and helps them to understand the regulatory process and how to participate. There has been positive feedback on the value and impact of this program from Aboriginal communities. This initiative will help improve regulatory outcomes in the public interest through proactive engagement of Aboriginal communities.

Although feedback on engagement and accessibility of NEB processes, including hearings, is generally very positive, the lack of participant funding continues to be cited by some hearing participants as an obstacle to the accessibility of NEB processes. In addition, with the TransCanada Alberta System now under NEB jurisdiction, the NEB will need to focus on building confidence and understanding with landowners and the Alberta public in the coming year.

The NEB delivers quality outcomes through innovative leadership and effective support processes

To achieve results for the Energy Regulation and Advice program, the NEB also focuses on the leadership and management accountabilities needed to support successful energy regulation.

Resource Capacity to Fulfil the NEB Mandate

Despite the economic downturn, 2008-2009 was an extremely busy year at the NEB. High levels of construction activity within the industry and more complex projects, combined with a highly competitive labour market made it difficult to attract and retain employees.

The NEB successfully hired seventy full-time employees in 2008-2009, representing 20 per cent of its total FTE component by the end of the year. These employees were hired to meet the Board’s growing workload and to replace those that left the NEB. The NEB continued to move forward with more robust resource allocation planning through its business planning process, which will help determine the appropriate employee complement and financial resources required for the future. In 2008-2009 the NEB delivered its program with a variance of less than two per cent of its budget, based on factors within its control that impacted planned and actual spending. These trends increasingly demonstrate a strong budgeting and projection process. A funding arrangement from 2007 for forty extra FTEs to meet the increase workload expires in 2010, and the NEB is working with the Treasury Board to address this adjustment through an allocation review.

The NEB focused on employee retention through strategies that make the NEB an attractive place to work. The retention elements of the NEB’s People Strategy promote work-life balance initiatives such as flexible work hours, telework arrangements and identifying and developing learning and development opportunities. In addition, a comprehensive awards and recognition program for employees, including a new award from the Chair, was introduced. The enhanced NEB compensation package with market allowance, performance pay plan and Calgary allowance was clarified and communicated to employees and new recruits. The attrition rate dropped in 2008-2009 by 4.7 per cent to 11.97 per cent for the year (rates were lower during the second half of the year). Although the decrease in attrition can partly be accounted for by downward economic trends and the addition of many new employees, retention strategies also contributed to this success. The NEB was also recognized as one of Canada’s Top 100 Employers in 2008 in an independent review.

Learning and Development

Considerable expertise is required throughout the organization to carry out the NEB’s mandate. To support knowledge acquisition and transfer, significant time and resources were invested during the year to develop a comprehensive learning and development program that links job specific learning with competencies and job families. The Board moved forward on developing its learning and development framework, including a draft policy and web-based technical excellence program. The program encompassed formal and informal training opportunities such as learning networks, communities of practice, job shadow opportunities, coaching/mentoring and conferences/workshops. To support the learning and development framework, more work is required in 2009-2010 on the job classification system. This work will extend the learning framework to all job families by identifying the key competencies required for employees to excel. The work related to the job classification system was impacted by the Expenditure Restraint Act, and clarification of scope and requirements was needed to proceed.

The NEB also focused on improving its employee on-boarding process, which was of particular importance due to the large proportion of new employees. New tools and training for employees and leaders were developed and made accessible through the NEB’s internal website to ensure organizational information and expectations are clearly delivered to new employees. The new on-boarding process was considered a success as it helped employees become familiar with the NEB and its culture much more quickly.

In addition to learning and development, the NEB used better information management as another strategy to manage and share information. The NEB completed the second year of its implementation plan for the Records, Document and Information Management System. All employees have been trained to use the system and daily use has increased. Additional integration will be required in the final year (2009-2010) of the three-year implementation plan. A new and enhanced internal website was also launched during the year, providing the organization with a communications and information hub.

Results-Based Culture

Building a results-based culture is key to achieving the NEB’s commitments. The NEB’s ISO-based quality management system promotes a cycle of continuous improvement for the organization. Through the consistent documentation, use of, and evaluation of processes, the NEB can better understand and assess where process improvements can be made. Although NEB continued to implement and make use of the system in 2008-2009, greater focus is needed in the coming year to integrate the principles of quality management throughout the organization. Communication and training is required to better develop the organization’s understanding of quality management and how it contributes to achieving quality outcomes.

As part of its support for recognition of employee performance, the NEB enhanced its existing performance management process, called RESULTS, by implementing an electronic employee results performance tracking tool in 2008-2009. The tool will enable year-round tracking of employees’ accountabilities, performance reviews, learning and development plans, and peer and leader feedback. The NEB’s RESULTs process provides the organization and employees with a way to clearly outline accountabilities and assess related performance. It also strengthens the “line of sight” between objectives outlined in the NEB Strategic Plan and Business Plans and how employees contribute to these objectives.

Regular employee feedback is solicited by management to better understand what employees need to be effective in their jobs, and to enjoy doing them. In the 2008 Public Service Employee Survey, 79 per cent of NEB employees considered the NEB to be “a good place to work”, somewhat lower than the NEB target of 85 per cent. In the coming year, employee responses to this survey, and to other employee opinion surveys, will be further evaluated to ensure this feedback is converted into action.

Lessons Learned

In evaluating performance results, several key learnings, and related actions, emerged for the NEB.

Considering recent industry performance trends, proactive steps must be taken to address safety issues. The NEB will share findings from compliance activities, and promote industry best practices to help the companies it regulates better understand the NEB’s expectations and, ultimately, improve their performance. The NEB will examine opportunities in 2009-2010 to improve safety performance indicators and will continue to work with industry on measures and reporting structures. NEB regulations will also be reviewed for clarity regarding safety expectations, and updated if necessary.

Findings from LMCI resulted in the decision to begin extending the regulatory framework in 2009-2010 to address the rights and interests of those affected by energy infrastructure or activities. By extending the regulatory program, the NEB can effectively set expectations, build consistent processes and monitor industry performance. In 2009-2010, the NEB will begin developing measures to support the new rights and interest component.

NEB measures and indicators must continuously improve to ensure the NEB can adequately evaluate industry trends, company performance and the effectiveness of its programs in influencing industry. However, a company information system is needed to support the development of some measures and to more comprehensively analyze trends in a timely manner. Information technology support is also required for the risk-based model to improve its effectiveness. An initiative to begin scoping and planning a company information system will be explored during 2009-2010.

Regulations should be proactively developed and updated to ensure regulatory processes are efficient and effective. The partnerships the NEB has developed are also extremely valuable in helping to improve regulatory processes and the NEB will continue to develop and strengthen relationships with other departments and agencies. Additional allocation of resources will be needed to successfully manage regulatory development issues and partnership development in the North and with the MPMO.

The economic conditions during 2008-2009 highlighted the need for comprehensive information on emerging market issues. As well, there is a demand for information on regulatory challenges related to the responsible development of energy infrastructure. The NEB will respond to the information needs of Canadians by focusing the energy information it produces on these areas over the next year.

The experience of hiring and developing a significant number of new employees during the year also provided learnings. A continued focus is needed on understanding the capacity required to fulfill the NEB mandate, both now and into the future. Focus is also needed on knowledge sharing and development, and initiatives to support more effective and efficient processes, such as the continued integration of quality management principals into the organization and the work that it does.

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