A reduced-order state observer controller, with a pragmatic viewpoint, applied to interconnected load frequency control problem in a deregulated power system is presented. In the practical environment, access to all of the state variables of system is limited and measuring all of them is also impossible. So when we have fewer sensors available than the number of states or it may be undesirable, expensive, or impossible to directly measure all of the states, using a reduced-order state observer is proposed. A proposed design, which is presented in this paper, has been developed in order to overcome this problem. The proposed strategy is tested on a two-area power system and compared with the optimal full-state feedback method by means of simulation. The results are shown that this method improved the dynamic response of system and provides a control system that satisfied the load frequency control requirements

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