4 min readShimlaMay 22, 2026 10:17 PM IST
In a major policy shift, the Himachal Pradesh State Electricity Board Limited (HPSEBL) has decided to stop supplying electricity to neighbouring states under the long-running “power banking” system after the state government decided not to provide 1,800 million units of power to the Board.
The move comes after the state government chose to sell its share of electricity in the open market to generate higher revenue instead of supplying it to the Board at subsidised rates. The neighbouring states primarily affected include Punjab, Haryana and Delhi.
A senior HPSEBL official privy to the development said, “The State Electricity Regulatory Commission has principally approved this. There are two primary reasons behind this move. First: Two mega electricity generation projects, including the Nathpa Jhakri Hydroelectric Power Station and SJVN Limited, are now under the state government. Earlier, we directly procured electricity from these two projects. Second: We will have to cater to domestic consumption.”
The official added, “This move doesn’t mean that the long-running ‘power banking’ system will completely shut, but indeed, it will be reduced to a great extent. We are yet to receive final approval, which is expected to come in the coming weeks.”
Explaining the existing system, the official said, “Under the ‘power banking’ system, we supply electricity to selected consumer states through the standard tender process. The state which used to offer the maximum price would get the majority of power. As now we are out of the picture, all these affairs fall under the purview of last year’s Himachal Pradesh Energy Management Centre (HPEMC).”
When asked whether neighbouring states could challenge the move legally, the official said, “Himachal has absolute right on how to utilise its electricity, which is generated within the state. We don’t think that there is any right with our counterparts to challenge our move.”
Secretary (Energy) Rakesh Kanwar said, “The HPEMC is trading in electricity as per the rules.”
Story continues below this ad
The HPEMC was constituted in October 2025 to efficiently manage the sale and purchase of electricity with the objective of maximising state revenue and minimising power procurement costs.
For years, the Himachal government supplied its electricity share to HPSEBL at around Rs 3.50 per unit. The Board would then provide surplus summer power to states such as Punjab, Haryana and Delhi under a banking arrangement and retrieve the same quantity during winters when demand increased and hydropower generation declined.
Under the electricity banking model, a state with surplus power supplies electricity to another state during periods of excess production and later receives the same quantity back when required. Hydropower-rich Himachal Pradesh benefited significantly from the arrangement because electricity generation rises sharply during summers due to snowmelt and increased water flow in hydroelectric projects.
Officials said rising temperatures and melting snow have increased water availability in hydropower projects across the state, with Himachal currently generating nearly 400 lakh units of electricity daily.
Story continues below this ad
However, experts warned that scaling down the banking arrangement could create challenges during winter months, particularly between November and February, when water levels fall and hydropower generation drops sharply.
Energy experts believe the decision could force HPSEBL to purchase electricity from the open market at significantly higher rates during winters, increasing the financial burden on the Board. The development is also expected to impact regional power-sharing dynamics across northern states that have long depended on Himachal’s seasonal surplus electricity.
