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Summary form only given. A rotary type frequency converter using two sets of adjustable speed generators/motors is expected to be applied at the interconnections between 50 Hz and 60 Hz power systems in Japan. The rotary type frequency converter can work not only as a power interchanger but also as a power system stabilizer by effectively utilizing energy stored in rotors. This paper investigates how the rotary type frequency converter affects power system dynamics and since shaft torsional oscillation and slow response due to mechanical connection are inevitable and may lead to instability in power system, it also presents some countermeasures or control schemes to handle such inherent problems and to improve performance of power system dynamics. Their control performances and effectiveness are examined for a test model system by digital transient simulation.