A new formulation of the principles of automatic generation control (AGC) is presented. Current AGC practice requires estimates of governor caused MW response to frequency deviations from nominal. The frequency bias for the AGC area control loop is an estimate of response for all online units within a given area, while the frequency bias for the AGC unit control loop and plant coordinated control loop is an estimate of the response of a given unit. If these estimates (biases) do not represent the actual response in real-time, AGC will create over (or under) shoot of governor nominal frequency setpoints and corresponding frequency deviations from nominal. Transformed AGC eliminates the need for bias settings, directly controlling the nominal frequency setpoint of each unit. The AGC process causes the area obligation (area load plus area net interchange schedule) to be divided up among the online units by any appropriate dispatch scheme and the resulting unit allocations become the targets for individual unit closed loop control. Units with setpoint capability receive the target directly while AGC controls the setpoint of the other units (rather than the measured megawatt output) to the target values.