Tacoma Public Utilities established its municipally owned electricity service in 1893, when it purchased the privately owned Tacoma Light and Power Co. By the beginning of the 20th century, the utilities district had begun looking to build new sources of power generation. Tacoma Power, a division of Tacoma Public Utilities, completed construction of its first dam, the LaGrande Powerhouse on the Nisqually River, in 1912. The Cushman project began in1919 in response to the demand for more power that followed the economic and housing expansion after WWI. Under the direction of Ira S. Davisson (commissioner, 1918-1940), Tacoma Power built Cushman Dam No. 1 to provide hydroelectric power to the city of Tacoma. Construction began in 1924 near Potlatch on the North Fork of the Skokomish River, Washington. At times the construction project employeed as many as five hundred men.

Using a "concrete arch" and "gravity and embankment" design, the structure consists of ninety thousand cubic yards of concrete, with a top width of eight feet and a base width of 50 feet, at 275 feet high and 1,111 feet long. Lake Cushman sits behind the dam, with 23 miles of shoreline. The design diverts water through a pipe connecting the reservoir to a powerhouse on Hood Canal. Hydroelectric power travels on a forty-mile transmission line, which includes a suspension across the Tacoma Narrows strait in Puget Sound, spanning 6,244 feet of water.

Cushman Dam No. 1 was activated on March 23, 1926, with the push of a button by President Calvin Coolidge in a ceremony at the White House. A second, smaller dam, Cushman Dam No. 2, was completed by December 1930.