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This paper presents an application of control theory to damp out load angle and speed oscillations through the excitation and governor subsystems in a hydro power plant connected as single machine infinite bus (SMIB) system. The control technique used is based on optimal pole shift (PS) theory, unlike linear quadratic regulation (LQR) method, which requires solving an algebraic Riccati equation. The adopted approach offers satisfactory damping on speed and load angle oscillations. The proposed control scheme is demonstrated on light, normal and heavy load operating conditions. It is observed that with the proposed technique, the control design is robust over a wide range of operating conditions. Also in this paper, a comprehensive assessment of the effects of optimal control approach when applied with state-estimation techniques; linear Kalman filter (KF) and first-order divided difference filter (FDDF) has been addressed.