The Chelan River has a history of dam development for navigation, power generation, and water supply.

It washed out during June of that year, only to be replaced by another structure built by the newly formed Chelan Water Power Company in 1893.

The larger and stronger dam was designed to raise the lake level enough to allow steamships to land at Chelan.

A year later, Washington Water Power received a 50-year federal license to construct the existing dam and powerhouse.

The Lake Chelan Hydroelectric Power Plant 20 acres (8.1 ha) historic district, comprising the dam, the water conveyance system, the surge tank and the power plant about 2 miles (3.2 km) southwest of the dam, was added to the National Register of Historic Places in 1988.

Water to power the turbine generators is delivered through an underground penstock connecting the dam and the powerhouse.

The only visible portion of the tunnel is a 130-foot (40 m) high surge tank constructed on the hill above the plant to absorb hydraulic momentum of the water in case of load rejection.

After passing around and through the turbine blades, water is discharged into the tailrace located on the east side of the powerhouse where it flows into the Columbia River.