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In this work, the Automatic Generation Control of an interconnected hydrothermal power system with a small capacity Capacitive Energy Storage augmented to both thermal and hydro area has been investigated. The effect of an integral controller as well as a PID controller whose gains are tuned by Genetic Algorithm technique has been examined and compared. The optimum values of the integral and PID controller gains without and with capacitive energy storage (CES) for both the areas are obtained by minimizing Integral Time Squared Error (ITSE) criterion. Simulation studies and a comparison of the dynamic responses reveal the improvement of AGC in terms of peak amplitudes and deviations in frequencies of both the areas, as well as tie line power with the PID controller and augmentation of Capacitive Energy Storage unit.