CALGARY – The Alberta Energy Regulator is laying off dozens of senior staff this week and there are more changes on the way, according to the provincial government.
The regulator, which oversees oil, gas and power projects in Alberta, is undergoing two separate top-to-bottom reviews by both its interim board and the provincial government.
The AER has been in a state of flux for much of last year since the November 2018 departure of former CEO Jim Ellis. A scandal soon engulfed the organization, culminating in an Auditor General’s report showed Ellis and other senior executives engaged in “gross mismanagement and waste of public resources, and critical failures to board oversight and management override of internal controls.”
Jason Kenney’s UCP government ousted the AER’s board in September 2019 and is seeking a permanent replacement for Ellis. The AER’s interim board and interim CEO Gordon Lambert have also launched an internal review of the organization.
Concurrently, the UCP government announced in July 2019 that it would conduct a full review of the AER, which employs 1,100 people.
Since that time, the AER has developed a new organizational structure “with less hierarchy” that “would help us to become more effective, efficient, and resilient and better support us in delivering on our mandate,” Lambert said in a release late Monday.
AER spokesperson Cara Tobin confirmed that “a couple dozen” vice-presidents and directors have been laid off since the beginning of the year and more cuts are expected by the end of February. She said she didn’t know how many positions would be cut by the end of next month.
“We have a whole new organizational structure, so there are changes across the organization,” Tobin said, adding, “we’re not working toward specific (full-time equivalent position) targets.”
She added that the organizational changes were made to work within the AER’s budget. Like most provincial departments, the AER is facing a reduced budget over the next four years.
“What is happening right now is not related to the (provincial government’s) review,” Tobin said.
The next steps for that provincial government review will include a process to find permanent directors for the AER’s board, said Kavi Bal, press secretary for Alberta Energy Minister Sonya Savage, who said the changes to the AER were necessary.
“We are pleased that the Alberta Energy Regulator is taking steps to review their organization structure reducing unnecessary hierarchy and duplication,” Bal told the Financial Post. “Alberta’s energy sector requires a well designed, single regulator for our energy resources, which is why we committed to a review of the organization in our platform — a review that is ongoing.”
The review began in July after Alberta Premier Jason Kenney asked Savage and Environment Minister Jason Nixon to evaluate the organization amid “unacceptably long” timelines for project approvals and “unacceptably high” fees charged to the energy sector.
At the same time, the Auditor General and the Public Interest Commissioner were working on reports into claims that AER executives including Ellis had redirected resources from the regulator for a separate organization called the International Centre of Regulatory Excellence.
The scandals and regulatory timelines are informing the government’s review, and the AER’s own review of its organizational structure.
“My expectation is that companies are still trying to figure out what’s happening next,” said Bob Schulz, a professor at the University of Calgary’s Haskayne School of Business.
He said there have been multiple changes at the main regulators that large oil and gas companies interact with over the course of the past year. In addition to the turmoil at the AER, a sweeping regulatory overhaul at the National Energy Board resulted in new review processes and the creation of the Canada Energy Regulator in 2019.
“There’s a lot of uncertainty,” Shulz said, referring to oil and gas companies’ struggle to understand all the changes at both regulators.
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