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Home > Reports > Reports on Plans and Priorities (RPP) > Future-oriented Statement of Operations For Years Ending March 31, 2011 and 2012-2013

Future-oriented Statement of Operations For Years Ending March 31, 2011 and 2012-2013

Future-oriented Statement of Operations For Years Ending December 31, 2011 and 2012-2013 [PDF 8036 KB]

Statement of Management Responsibility

National Energy Board management is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared. These statements are based on the best information available and assumptions adopted as at December 31, 2011 and reflect the plans described in the 2012-13 Report on Plans and Priorities.

The actual results achieved for the fiscal years covered in the accompanying financial information will vary from the information presented, and the variations may be material.

The future-oriented financial statements for the National Energy Board have not been audited.

The original version was signed by _________________________________ Gaétan Caron Chair and CEO Calgary, Canada 2 May 2012 _________________________________ Date

The original version was signed by _________________________________ Ed Jansen, CA Chief Financial Officer Calgary, Canada 2 May 2012 _________________________________ Date

 

Future-oriented Statement of Financial Position
As at March 31
(in thousands of dollars)

	Estimated Results 2012	Planned Results 2013
ASSETS
Financial assets
Due from Consolidated Revenue Fund	6,671	5,479
Accounts receivable and advances (Note 6)	31,844	28,314
Total financial assets	38,515	33,793
Non-financial assets
Prepaid expenses	208	218
Tangible capital assets (Note 7)	6,396	5,717
Total non-financial assets	6,604	5,935
TOTAL	45,119	39,728
LIABILITIES AND EQUITY OF CANADA
Accounts payable and accrued liabilities (Note 8)	6,834	5,671
Other payables (Note 9)	15,700	11,775
Vacation pay and compensatory leave	2,477	2,809
Employee future benefits (Note 10)	7,517	7,652
Total liabilities	32,528	27,907
Equity of Canada	12,591	11,821
TOTAL	45,119	39,728
Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.
Contingent Liabilities (Note 11) Contractual obligations (Note 12)
The accompanying notes form an integral part of these future-oriented financial statements.

 

Future-oriented Statement of Operations
For the Year Ended March 31
(in thousands of dollars)

	Estimated Results 2012	Planned Results 2013
Revenues
Energy Regulation	33,995	37,143
Energy Information	7,853	6,991
Internal Services	23,559	21,076
Total Revenues	65,407	65,210
Expenses
Energy Regulation	37,197	41,011
Energy Information	8,593	7,719
Internal Services	25,778	23,271
Total Expenses	71,568	72,001
Net Cost of Operations	(6,161)	(6,791)
Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.
Segmented information (Note 14)
The accompanying notes form an integral part of these future-oriented financial statements.

 

Future-oriented Statement of Equity of Canada
For the Year Ended March 31
(in thousands of dollars)

	Estimated Results 2012	Planned Results 2013
Equity of Canada, beginning of year	25,139	12,591
Net Cost of operations	(6,161)	(6,791)
Net cash provided to Government	(15,853)	(1,211)
Change in due from the Consolidated Revenue Fund	753	(1,191)
Services received without charge from other government departments (Note 13)	8,723	8,423
Transfer of assets and liabilities to other government Departments	(10)	-
Equity of Canada, end of year	12,591	11,821
Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.
The accompanying notes form an integral part of these future-oriented financial statements.

 

Future-oriented Statement of Cash Flow
For the Year Ended March 31
(in thousands of dollars)

	Estimated Results 2012	Planned Results 2013
Operating activities
Cash received from:
Regulatory levies and miscellaneous revenue	(78,496)	(63,112)
Cash paid for:
Salaries and employee benefits	48,105	46,027
Professional and special services	6,174	6,591
Travel	2,845	3,170
Accommodations	1,197	1,691
Utilities, materials and supplies	656	1,323
Communications	1,140	1,236
Other	90	65
Cash used in operating activities	(18,289)	(3,009)
Capital investment activities
Acquisitions of tangible capital assets	2,436	1,798
Net cash provided by (to) Gov't of Canada	(15,853)	(1,211)
Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.
The accompanying notes form an integral part of these future-oriented financial statements

 

1. Authority and Objectives

The National Energy Board (NEB or Board) is an independent regulatory agency, established in 1959 under the National Energy Board Act and is designated as a department and named under Schedule I.1 of the Financial Administration Act, reporting to Parliament through the Minister of Natural Resources.

The NEB regulates the following specific aspects of the energy industry:

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

Other responsibilities of the NEB include providing advice to the Minister of Natural Resources Canada on the development and use of energy resources. The NEB operates as a quasi-judicial tribunal. The Board may hold public hearings at which applicants and interested parties have full rights of participation.

NEB’s corporate purpose is to promote safety, environmental protection and economic efficiency in the Canadian public interest within the mandate set by Parliament in the regulation of pipelines, energy development and trade. This principle guides the NEB in carrying out and interpreting its regulatory responsibilities. 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 which allows these economic activities to occur when they are in the public interest.

The NEB’s framework of program activities is comprised of:

• Energy Regulation this is grouped into two sub-programs, the first part being the development of regulation and compliance tools, guidance and processes and the second part being regulation implementation which is the processing of applications and regulatory oversight through monitoring and enforcement;
• Energy Information - provides energy industry information, market outlook and surveillance to the Board, industry and the Canadian public;
• Internal Services the activities that provide management and support services to the Board such as Human Resources, Financial and Information Management.

2. Methodology and significant policies

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the department as described in the Report on Plans and Priorities.

The main assumptions are as follows:

• The department’s activities will remain substantially the same as for the previous year.
• Expenses and revenues, including the determination of amounts internal and external to the government are based on historical experience. The general historical pattern is expected to continue.
• Estimated year end information for 2011-12 is used as the opening position for the 2012-13 planned results.

These assumptions are adopted as at December 31, 2011.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2011-12 and for 2012-13, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these future-oriented financial statements the National Energy Board has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:

1. Implementation of new collective agreements.
2. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.
3. Volume and complexity of regulatory applications and hearings.

Once the Report on Plans and Priorities is presented, the National Energy Board will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

The future-oriented financial statements have been prepared in accordance with Treasury Board accounting policies in effect for the 2010-2011 fiscal year. These accounting policies, stated below, are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

1. Parliamentary authorities - the NEB is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the NEB do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Future-oriented Statement of Operations and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a high-level reconciliation between the bases of reporting.
2. Net Cash Provided by Government - The NEB operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the department is deposited to the CRF and all cash disbursements made by the department are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.
3. Amounts due from/to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the NEB is entitled to draw from the CRF without further parliamentary expenditure authorities to discharge its liabilities.
4. Revenues - are recorded on an accrual basis:
   • Revenues from regulatory levies are recognized in the accounts when they are invoiced and, in accordance with the National Energy Board Cost Recovery Regulations, are based on the estimated cost of operations for the calendar year, with a billing adjustment to actual costs once the costs are known.
   • Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
   • Revenues that have been invoiced but not yet earned are recorded as deferred revenues.
5. Expenses - are recorded on an accrual basis:
   • Vacation pay and compensatory leave are accrued as the benefits are earned under their respective terms of employment.
   • Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans, and legal services are recorded as operating expenses at their estimated cost.
   • Expenditures that are excluded from Cost Recovery Regulations are those expenditures related to the regulation of oil and gas exploration and development on frontier lands. These amounts are included as Expenses in the Statement of Operations.
6. Employee future benefits
   1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government. The NEB contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the department to make contributions for any actuarial deficiencies of the Plan.
   2. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
7. Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is established for receivables where recovery is considered uncertain.
8. Contingent liabilities - Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the future-oriented financial statements.
9. Tangible capital assets - All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more or significant bulk purchases over $10,000 where each item may be less than $10,000, are recorded at their acquisition cost. The department does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.
   
   Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:
   
   

   Asset class	Amortization period
   Informatics hardware: PCs and accessories Computer servers & accessories	3 years 5 years
   Informatics software Commercial software In-house developed software	2 years 5 years
   Machinery and equipment	5 years
   Furniture	10 years
   Vehicles	5 years
   Leasehold improvements	Lesser of the remaining term of the lease or useful life of the improvement

   
   The cost of software not yet in service forms the basis of the Assets under development account. Assets under development are amortized once they are in service.
10. Measurement uncertainty - The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the future-oriented financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could significantly differ from those estimated.

5. Parliamentary Authorities

The NEB receives most of its funding through expenditure authorites provided by Parliament. The majority of expenditures are subsequently recovered from the companies regulated by the NEB and the funds are deposited in the Consolidated Revenue Fund of the Government of Canada.

Items recognized in the Future-oriented Statements of Operations and Financial Position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the NEB has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Authorities requested
	Estimated 2012	Planned 2013
	(in thousands of dollars)
Authorities requested Vote 25 - Program expenditures	60,019	55,992
Statutory amounts	7,099	6,495
Lapsed appropriations: Operating	67,118	62,487
Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.

 

(b) Reconciliation of net cost of operations to requested authorities:
	Estimated 2012	Planned 2013
	(in thousands of dollars)
Net cost of operations	6,161	6,791
Adjustments for items affecting net cost of operations but not affecting appropriations:
Services provided without charge	(8,723)	(8,423)
Amortization of tangible capital assets	(1,600)	(2,477)
Revenue not available for spending	65,407	65,210
Increase in vacation pay and compensatory leave	(230)	(280)
Increase in employee severance benefits	(133)	(143)
Other	(21)	(19)
	60,861	60,659
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets	2,437	1,798
Increase in prepaid expenses	20	30
	2,457	1,828
Forecast current year lapse	3,800
Forecast authorities available	67,118	62,487

6. Accounts receivable and advances

The following table presents details of the NEB’s accounts payable and accrued liabilities:

	Estimated Results 2012	Planned Results 2013
	(in thousands of dollars)
Receivables from other Federal Government departments and agencies	92	116
Receivables from external parties	33,412	28,124
Employee advances	70	74
	33,574	28,314
Less: allowance for doubtful accounts on receivables from external parties.	(1,730)	-
	31,844	28,314

7. Tangible capital assets

	Cost
Capital asset class	Opening balance	Acquisitions	Transfers	Disposals & write-offs	Closing balance
Informatics hardware	3,064	300	-	-	3,364
Informatics software	7,246	1,312	-	-	8,558
Machinery and equipment	1,071	186	-	-	1,257
Furniture	1,405	-	-	-	1,405
Vehicles	37	-	-	-	37
Leasehold improvements	1,811	-	-	-	1,811
Assets under development	-	-	-	-	0
Total	14,634	1,798	0	0	16,432

 

	Accumulated amortization					Net book value
Capital asset class	Opening balance	Amortization	Disposals & write-offs	Closing balance		2012	2013
Informatics hardware	1,919	470	-	2,389		1,145	975
Informatics software	3,813	1,303	-	5,116		3,433	3,442
Machinery and equipment	640	205	-	845		431	412
Furniture	404	248	-	652		1,001	753
Vehicles	8	9	-	17		29	20
Leasehold improvements	1,454	242	-	1,696		357	115
Assets under development	-	-	-	-		-	-
Total	8,238	2,477	-	10,715		6,396	5,717

8. Accounts payable and accrued liabilities

The following table presents details of the NEB ‘s accounts payable and accrued liabilities:

	Estimated Results 2012	Estimated Results 2012
	(in thousands of dollars)
Accounts payable to other government departments and agencies	31	47
Accounts payable to external parties	3,682	2,267
	3,713	2,314
Accrued liabilities	3,121	3,357
	6,834	5,671

9. Other Payables

Other Payables represents the 2011-2012 Greenfield fees invoiced to external parties. These amounts are recognized as adjustments to other regulated parties and will be settled via reduced billings in 2012-2013 and 2013-2014.

10. Employee benefits

(a) Pension benefits:

The NEB's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.

Both the employees and the NEB contribute to the cost of the Plan. The forecast expenses are $5,103,905 in 2011-12 and $4,669,553 in 2012-13, representing approximately 1.9 times the contributions by employees.

The NEB's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

(b) Severance benefits:

The NEB provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, estimated as at the date of these statements, is as follows:

	Estimated Results 2012	Planned Results 2013
	(in thousands of dollars)
Accrued benefit obligation, beginning of year	7,384	7,517
Expense for the year	435	712
Benefits paid during the year	(302)	(577)
Accrued benefit obligation, end of year	7,517	7,652

11. Contingent liabilities

Claims and litigation

Claims have been made against the NEB in the normal course of operations. As of the date of the preparation of these future-oriented financial statements, legal proceedings for claims totalling approximately $4,200,000 are pending.

12. Contractual obligations

The nature of the NEB's activities can result in some large multi-year contracts and obligations whereby the NEB will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(thousands of dollars)	2012	2013	2014	2015	2016 and thereafter	Total
Vendor contracts	2,826	846	28	28	-	3,728

13. Related party transactions

The NEB is related as a result of common ownership to all Government of Canada departments, agencies, and Crown Corporations. The NEB enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the NEB received common services which were obtained without charge from other Government departments as discussed below.

(a) Common services provided without charge by other government departments

During the year the NEB received services without charge from certain common service organizations, related to accommodation, legal services and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recognized in the NEB's Future-Oriented Statement of Operations as follows:

	Estimated Results 2012	Planned Results 2013
	(thousands of dollars)
Accommodation	4,965	5,015
Employer's contribution to the health and dental insurance plans	3,635	3,290
Legal Services	118	118
	8,723	8,423

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General are not included in the NEB's Future Oriented Statement of Operations.

(b) Other transactions with related parties:

	Estimated Results 2012	Planned Results 2013
	(thousands of dollars)
Accounts receivable from other government departments and agencies	92	116
Accounts payable to other government departments and agencies	31	47
Expenses - Other Government departments and agencies	8,612	8,385
Revenues - Other Government departments and agencies	-	-

14. Segmented information

Presentation by segment is based on the NEB’s program activity architecture. The presentation by segment is based on the same accounting policies as described in the Summary of Significant Accounting Policies in note 4. The following table presents the forecasted expenses incurred and forecasted revenues generated for the main program activities, by major object of expense and by major type of revenues. The segment results for the period are as follows:

		2013
	2012 Total	Energy Regulation	Energy Information	Internal Services	Total
Operating Expenses
Salaries and employee benefits	52,764	27,931	5,256	15,847	49,034
Professional and special services	6,297	4,109	773	2,332	7,214
Accommodation	6,176	4,091	770	2,321	7,182
Travel	2,845	1,805	340	1,025	3,170
Amortization (Note 5)	1,600	1,410	266	801	2,477
Utilities, materials and supplies	656	868	163	492	1,523
Communication	1,140	761	143	432	1,336
Other	90	37	7	21	65
Total Operating Expenses	71,568	41,012	7,718	23,271	72,001
Revenues
Regulatory	65,372	37,123	6,987	21,065	65,175
Miscellaneous	35	20	4	11	35
Total Revenues	65,407	37,143	6,991	21,076	65,210
Net Cost of Operations	6,161	3,869	727	2,195	6,791

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Date Modified:

2013-03-15