Its construction was in response to growing power demands and a lack of dam sites on the Grand River.
During periods of lower power demand, water is pumped from Lake Hudson to Lake Holway and released back down through the pump-generators during periods of high energy demand.
External power, in this case an electric motor, supplies the needed energy.
[4] Severe drought in 2005 greatly reduced runoff in the entire Grand River watershed.
The SPSP agreement with the Federal Energy Regulatory Commission (FERC) requires that Lake Hudson elevation be a minimum of 619 feet (189 m) in order to pump water into Lake W. R. Holway.