The penstock delivering water to the power plant has a hydraulic head of 103 m and a design volume of 500 m³/second. Pangue contributes 10% of the electricity fed into the Chilean integrated grid, making it the third larges power station after Ralco (640 MW) and Pehuenche (500 MW). The dam is made of roller-compacted concrete, using about a million cubic meter of concrete. The dam and power plant were built from 1993 to 1996. Behind the dam lies a reservoir of 500 hectares, 14 km long and 360 m wide. This makes it one of the most efficient large hydropower plants in the world, as measured by the relation between electricity production and area flooded. The construction of Pangue, just as the one of Ralco, generated controversies between environmentalists, the Government and the private power company Endesa, because the dam impacted the indigenous Pehuenche people, whitewater rafting areas and the rights of farmers further downstream.
During the construction of the dam, the Appellate Court of Concepcion halted construction arguing that the filling of the reservoir and the dam’s operation unduly affected the water rights of farmers further downstream. However, the Chilean Supreme Court overruled the lower court and decided that the nonconsumptive water rights of Endesa took precedence over the consumptive water rights of irrigators. One U.S. scholar said that the decision relied on a government report that itself was “hard to interpret as anything other than a response to political pressure from higher levels of government”, that the decision was “seriously flawed”, made “on the basis of legal reasoning of dubious quality” and that the decision constituted “a major transfer of wealth from irrigators to electric companies”.