A report looking at how to modernize the National Energy Board (NEB) is calling for a complete overhaul, suggesting that it be replaced with two new agencies and its leadership moved from Calgary to Ottawa.

A five-member expert panel was appointed last fall to look at the structure, role and mandate of Canada's national energy regulator.

The panel submitted its recommendations Monday to Natural Resources Minister Jim Carr.

The recommendations include the formation of a new Canadian Energy Information Agency (CEIA) and a new Canadian Energy Transmission Commission (CETC), two bodies that would effectively replace the existing NEB.

The panel also suggests that at least part of the new regulatory apparatus be moved from Calgary to Ottawa immediately, as well as other components as its operations evolve.

"We heard intense and near-unanimous criticism of the current requirement that board members reside in the Calgary area," the report said, noting that several participants in the review argued that having NEB in Canada's energy sector capital erodes its independence.

"We do agree entirely that Canada's energy transmission infrastructure regulator needs a stronger connection to the seat of the federal government."

Former NEB chair Gaetan Caron told CBC News the recommendations are not surprising.

"This committee could not have said, 'OK, we listened to all Canadians and by the way, we found everything was fine the way it was,' it wasn't possible," he said. "And I think their public interest mandate included thinking creatively about how the system could be upgraded."

Move board to Ottawa, panel says

The panel proposes that the office of CETC's board of directors be located in Ottawa, along with an office devoted to governmental co-ordination, while CEIA could be set up in the capital at a later date.

"As the role of energy information provision migrates to the new Canadian Energy Information Agency, it would be prudent to locate that agency — as well as NEB staff today performing this function — proximate to partners in Statistics Canada, Natural Resources, and Environment and Climate Change Canada, to the extent possible," the report states.

Calgary Mayor Naheed Nenshi said he had not yet read the entire report, but the rationale for moving the NEB east left him "steamed."

"Because it seemed to imply that a Calgary-based organization must be biased, because it's in Calgary," he said. "That is a ridiculous assertion … and I hope the federal government will push back on that very strongly."

Nenshi said the NEB should remain in Calgary.

"What's the point of having the regulatory body far removed from where hearings have to be and where all the players are, it just adds cost and complexity to the situation. It's worked well in Calgary. There are some things that need to be fixed, but if we've come up with a regulator that is truly science based, that makes good decisions, of course it has to be in Calgary, there's no question in that."

The panel also recommends a one-year process for the government to work out if major projects align with the national interest, to be followed by a two-year hearing process to be handled jointly by the two agencies.

The panel also called for "real and substantive" participation from First Nations communities.

"Canadians told us that they expect to see their energy regulator fully realize nation-to-nation relationships with Indigenous Peoples. We agree," the report says.

Some employees could remain in Calgary

Former NEB executive Brenda Kenny, who was a panellist behind the report, told CBC Calgary News at 6 that a new board of governors would be based in Ottawa, but many NEB employees should remain in Calgary.

"We have a strong force here in Calgary benefiting environment and engineering and many of them will stay here," she said. "It'll be up to the management to think about the numbers, but I would say not the majority."

Kenny said she would envision about 100 employees being based in Ottawa and around 300 in Calgary, with regional offices also beefed up.

"That will adapt with time as needs change," she said. "You need more electricity, Ottawa will grow. You need more pipeline inspectors, other regional offices will grow."

The government will now spend the next few months reviewing the report.

Ottawa is inviting comments online on the panel's recommendations until June 14.

The National Energy Board has a mandate to regulate the construction and operation of fossil fuel pipelines and power lines that cross provincial or international borders, as well as the imports and exports of natural gas, the export of oil and electricity, and oil and gas exploration.

It is an arm's length, quasi-judicial tribunal, which reports to Parliament by making recommendations to the federal minister of natural resources.