[3] On July 15, 1926, Connecticut Light and Power Company's board of directors approved a plan to create the first large-scale operation of pumped storage facilities in the US.

Excess electricity from the valley's hydro-system is used to pump water up a hillside into the lake from the nearby Housatonic River during spring, and overnight hours in summer.

The water is then allowed to flow back down into the river when extra electricity is needed in the grid, often during the region's mid-to-late summer heat waves.

Within a few weeks of the decision to move ahead, 50 surveyors began to scout the valley, and lawyers were hired to process the deeds transferring land held by some families since before the American Revolution into the hands of CL&P.

Engineers had planned on the Rocky River and its tributaries filling the valley one-fourth of the way, with the generating plant pumping the remaining three-fourths of the water out of the Housatonic.

The valley filled quickly; on September 29, 1928, the water reached an elevation of 429 feet (131 m) above sea level, and Candlewood Lake was considered completed.

A 6 miles per hour (9.7 km/h) speed limit is in effect within 100 feet (30 m) of shore, dock, moored vessels, and other places that the power company has marked as hazardous.

Scuba divers can investigate buildings from the era before the lake was created, follow underwater roads, and discover artifacts.

Some of the notable underwater finds are Model Ts, plane wreckage from small craft that have hit the lake since then, and covered bridges.

[5][6][7][8] In October 2016, zebra mussels were found on the Rocky River power station for the first time, reinforcing fears that the harmful invasive species will eventually make its way into the lake itself.