In July 1997, the International Federation for Human Rights sent a Commission to Chile to investigate the consequences of the construction of Ralco HEP. The report wrote: “tendría serias implicaciones humanas, étnico-culturales y ecológicas, y graves consecuencias jurídicas históricas. Porque obligaría el abandono, por las comunidades mapuche-pehuenche del Alto Bío Bío, de su hábitat ancestral, y la represa inundaría sus tierras y lugares sagrados, legalmente inenajenables e inembargables, en una región considerada, además, un ecosistema notable que se vería profundamente afectado”. This statement strengthened the communities' struggle around the project, which managed to stop the project construction in several occasions between 1997 and 1999. Endesa and the Eduardo Frei government had to face one of the first major socio-environmental conflicts in Chile. 

Despite strong opposition by the National Corporation for Indigenous Development (CONADI) and several environmental organisations, the project was approved in 1999 and eventually inaugurated in 2004. Since then, there have been on-going protests and repeated lawsuits against the dam construction. Community cemeteries have been flooded. The agreement before the Inter-American Court of Human Rights in 2003, which ensures to the affected communities access to the land and to water, was never respected. The Ralco-Endesa project was finally completed despite a ten-year dispute involving indigenous communities, the Chilean Government and private interests. This struggle came to symbolize the problems associated with a lack of appropriate mechanisms for the protection of natural resources and ethnic minorities, theoretically protected by the National legislation. 

The dam had several serious impacts and provoke important damages. In May 2001 the dam wall broke due to important rainfall. The downstream reservoir Pangue avoided a catastrophe for the communities living downstream.

In 2003, Nicolasa and her community obtained an agreement with the Government of Lagos and with the participation of Endesa, before the Inter-American Commission on Human Rights. The government promised to give land, water and touristic project for the livelihood of the Pehuenche people, freed political Mapuche prisoners, and made the 169 Convention of ILO adopted in the Congress.

However, the Pahuenche communities have remained with no water, no suitable land, no services, no schools for years to come. They even lost their cemeteries, including the ancestral Quepuca Ralco. In July 2006 heavy rains inundated the riverine lands, leaving at least 8 people dead. This was especially due to the construction of a 155 high meter wall to redirect the flow of the river in an area of important water level fluctuation. The Pehuenche people were finally relocated by Endesa and the government in a highly unsuited area, known as El Barco, where husbandry and agriculture were not possible, which left the communities even more poor and vulnerable.

Impacts have not been mitigated then, and local communities have not gained any benefit from the project. In 2013,  Ñana Nicolasa was found dead on in the lake Ralco under still uncertain circumstances.

Today, Chile’s current Minister of Energy is finalizing a Watershed Mapping Study to prioritize hydro development in conflict watersheds. If implemented as policy, the study would facilitate construction of several large dams in the Bio Bio Watershed, as well as dams in at least six other major watersheds. In the Bio Bio watershed, two existing dams built by Endesa have already created conflicts in the region. The companies which own the additional water rights and would benefit from the policy are Brazilian firm Atiaia, and Energía Frontera SPA, which is owned by Energía Llaima. If the Minister of Energy is allowed to implement the study as national policy, it will make it easier for companies to gain approval for building dams in the Bio Bio watershed, particularly along the Bio Bio River.

Ralco Project envisaged the creation of a 370 m long and 155 m high water containment system along the upper Biobio River, covering an area of 3,467 hectares, with a capacity of 1,220 million m3 of water.

The power station had a capacity of 570 MW, which was later raised to 690 MW, with a level of investment of 582,000,000 US$