Abstract: This paper presents a new operation scheme of pumped storage power plants for improving their capability of peak load regulation with no increase in power system load. First, according to the working principle and working characteristics of pumped storage plants in a power system, we analyzed their peak load regulating role in power balance of the system and the losses in the power outputs due to abandoning surplus water by hydropower plants in flood season. Then, a scheme was formulated for better use of the surplus water through adjustment of the operation of the plants. In this scheme, a higher priority is given to the power generating efficiency of the plants and their storage capacity is preferably used to improve the efficiency. If the system peak load is shifted by daily regulation of the plants in this case, the peak-valley load difference and peaking capacity demand of the power system can be reduced. Calculation results show that this method produces a significant improvement on the system capability of reducing surplus water consumption, relative to the case that all the power plants share the reserve and adopt the traditional operation mode of peak load shifting. Thus, this new scheme is effective and feasible and it brings about significant benefit of power generation.