It was built in the sixties - at that time, this was a very sane method of offsetting peak loads. In any case, excess power from any hydro is better stored than simply let go across the ether. While the storage method may need an upgrade, this temp storage of work energy is something we have to perfect in the very near future.

It's hard to find a sandstone section that can hold pressure in the tilted mess that composes a mountain range. Using a secondary reservoir is probably the only thing that makes sense in that location. Since the jury is still out on the failure, my 2 cents is that it is ice wedging in local strata that caused weakening over time. Only way to stop this is to grout all the cracks in the reservoir, and with minor earth shakes weekly, that may not be realistic.

There's storage at the source (water in the reservoir, coal in the pile) and at the destination.  One of the big variable loads is air conditioning; the Ice Bear has brought ice-storage systems down to the size for a relatively small building.  With systems like that, the A/C load peak could go anywhere you like in the 24-hour period.

Combine them with a substantial amount of load from (partially or completely) electric vehicles, you could make the load curve pretty much flat all day, every weekday.  This would let hydro systems operate in "run of the river" mode.  New systems without reservoirs would vary their output strongly with the seasons, but if they produced enough energy to justify the capital cost, you couldn't beat the price of the fuel.