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This paper presents a reduced-order estimator by using an LQR regulator with a prescribed degree of stability for two-area load frequency control problem in a deregulated power system. In the practical power system, access to some of the state variables in LFC system is limited and measuring is also impossible. So a reduced-order estimator is proposed. But to access a good dynamic response a controller with prescribed degree of stability is combined with this estimator model. The results of the simulation are shown that with using this method, the load frequency control requirements in a practical environment are satisfied and also with so good dynamic responses, sensitivity to plant-parameter variations is reduced.