In deregulated power markets, generated power can be time-shifted from a period of low price to that of high price by energy storage with an efficiency penalty. Pumped storage is a common form of energy storage. The total amount of power stored (megawatt-hour) is set by the reservoir capacity. The rate of recovery of stored energy (megawatt) is set by the capacity of the pump/generator and related equipment. A model is developed to maximize the return on investment in pumped storage by varying the generation capacity for a given reservoir to optimize the daily operating hours. Two examples from Alberta, Canada, confirm that the size of pump/generator relative to the reservoir capacity that optimizes daily operating time and return on investment depends on each of the deregulated power market (diurnal price pattern), the site within the power market (site-specific interconnection charges), and the storage technology (energy efficiency).