Ottawa weighs funding jump for NEB

DAVID EBNER
Globe and Mail
10-Oct-2006

Calgary — The federal government is considering a major funding increase for the National Energy Board as the regulator faces a crushing workload and debilitating staff raids from pipeline companies bolstering their own work forces.

Losing staff, especially experienced technical people, is devastating the NEB and if the regulator doesn't get the additional funds, one source familiar with the situation said the result will be “brutal.”

“The workload is increasing dramatically,” said David MacInnis, president of the Calgary-based Canadian Energy Pipeline Association, whose members include Enbridge Inc. and TransCanada Corp.

“The stack of applications just continues to grow.”

The NEB is currently in the midst of year-long public hearings to evaluate the proposed Mackenzie Valley natural gas pipeline project, one of the largest files in its history. TransCanada's Keystone pipeline project, to move oil sands output to the United States, begins public hearings on Oct.23 and a hefty application is expected soon for Enbridge's Gateway project to move oil sands crude to the West Coast for export to Asia.

All the pipelines are multibillion-dollar projects and it has been estimated that each day of unnecessary regulatory delay costs industry and the country $100-million. And without a vigorous regulator, key environmental questions and issues of first nations rights don't receive the close attention they require.

The NEB, based in Calgary and regulator of energy infrastructure that crosses provincial boundaries, has an annual budget of about $40-million, which it hopes Ottawa will increase to about $50-million, or by roughly 25 per cent.

The regulator lost 55 employees — about 20 per cent of its staff — to industry in 2005 and the trend hasn't abated this year. The NEB simply can't compete. For a senior employee, the regulator is said to pay $91,000 a year, while industry on average pays the same person $106,000 including bonuses and stock options, compensation methods the regulator can't match.

The federal government's Treasury Board, whose president is John Baird, is evaluating the NEB's request, a slow process that has lasted for months.

“If it looks anything coming out like it did going in remains to be seen,” a source said.

The issue for the federal government is equity among various unionized federal employees. While the NEB is an independent federal agency, its workers are part of the broad public service union. Ottawa's fear is that if NEB workers get raises and bigger bonuses, other parts of the union will clamour for more cash too.

However, many people involved in the situation believe there is a solution and point to the Ontario Energy Board, which several years ago was cut from its direct connection with the province's employment agreements, a change that occurred under Mr. Baird, then Ontario energy minister.

The NEB wants to be able to provide industry-like bonuses to its strong performers, so that those employees can be retained in the face of competing offers from the private sector.

The money for the NEB, in the end, actually comes from industry itself, which reimburses the regulator for most of the funds required to evaluate applications.

The federal Treasury Board takes requests for additional funding and then forwards them to the government department responsible for the agency making the request, which in the case of the NEB is Natural Resources Canada. The request goes back to the Treasury Board, where it receives additional review before going to a committee of government ministers, a group headed by Mr. Baird.

“It's a long process,” said Robert Makichuk, a Treasury Board spokesman. He couldn't comment on the NEB specifically, citing confidentiality.

Mr. MacInnis of the pipeline association said industry wants to see change.

“There's got to be an answer,” Mr. MacInnis said. “Our point, to the government of Canada, is they need to provide the National Energy Board the flexibility to attract and retain the right people.”