In recent rate proceedings, a consistent message has emerged from regulators:
“We are less focused on whether an asset ultimately failed and more focused on whether the utility can demonstrate that its decision-making process was reasonable and evidence-based at the time the investment was approved.”
Utility operators are heading into 2026 facing heightened expectations and scrutiny around how they explain both past investments and forward-looking decisions. Rate determination is no longer a backward-looking exercise focused solely on what was spent; it is increasingly a forward-looking evaluation of how risk was identified, prioritized, and reduced at the time decisions were made.
A core challenge utilities face today is that many existing workflows and risk frameworks reflect the past. They rely heavily on historical failures, static models, and fragmented datasets that fail to capture how conditions evolve in real time. Under a regulatory lens, these limitations can create evidentiary gaps or appear inconsistent.
Standing still is no longer a viable option.
The presence of risk has not changed. What has changed is when and how risk is evaluated, documented, and explained. Operators are now expected to clearly articulate why certain assets and regions are prioritized over others, and to support those decisions with evidence and data, not just reported outcomes.
Traditional justification focus: Immediate safety, code compliance
Emerging justification requirement: Cost-effectiveness relative to non-gas alternatives (e.g., targeted electrification); granular, project-specific justification at the segment level
Traditional justification focus: Broad, accelerated replacement of leak-prone materials (iron, LPP)
Emerging justification requirement: Risk-ranked replacement targeting the highest-risk CI/DI segments first; timing aligned with federal compliance windows; demonstrated avoidance of premature replacement of lower-risk assets (e.g., certain MCS segments)
Traditional justification focus: Load growth, franchise obligation
Emerging justification requirement: Demonstration of long-term “used and useful” benefits to existing ratepayers in a decarbonizing environment; elimination of growth subsidies
Traditional justification focus: Routine maintenance, personnel training
Emerging justification requirement: Strict adherence to safety protocols; shareholder accountability for major safety lapses, including financial penalties
Today, predictive risk intelligence solutions for regulated, safety-critical infrastructure are validated and ready for deployment. Doing nothing not only increases regulatory, operational, and capital risk. It also compounds the likelihood of larger, more complex risks over time.
To support this shift, operators are increasingly seeking ways to surface risk earlier, understand it in a system-wide context, and clearly demonstrate how mitigation actions reduce exposure over time. These capabilities help bridge the gap between operational decision-making and regulatory expectations by making decision logic easier to document, explain, and defend.
At KartaSoft, this approach is reflected across three focus areas:
Together, these capabilities are designed to help operators derisk their networks through defensible decision-making, as rate determination continues to evolve from after-the-fact justification to forward-looking defensibility.