An underground powerhouse, consisting of turbines and pumps, would be installed along an underground pipe, also known as a penstock, connecting one 61-acre reservoir located atop a ridge in the Goodnoe Hills to another 63-acre reservoir sited on a portion of the former aluminum smelter site near John Day Dam, around a 2,000-foot difference in elevation.

In times of low demand for electricity, excess electrical generation is stored by pumping water uphill from the lower reservoir to the upper reservoir. When the demand is high, the water is released through the penstock and turbines into the lower reservoir, generating electricity.