This paper presents the design of a fuzzy gain scheduled proportional-integral (FGSPI) controller for load frequency control (LFC) of two-area multi unit power system with and without superconducting magnetic energy storage (SMES) unit in each area. The power system comprises of two reheat type thermal units of same capacity in each area. The dynamic response has been studied for 1% step load perturbation in area-1, using settling times, overshoots and undershoots of the tie-line power and frequency deviations as performance indices. The proposed intelligent controller is compared against conventional proportional-integral (PI) controller and optimal state feedback linear quadratic regulator (LQR) controller. Comparative analysis of the results shows that the proposed controller is quite effective and better than the other two controllers. The paper also adopts a new formulation of the area control error (ACE). Results obtained with this new control strategy using modified ACE indicate improvement of dynamic response. Simulations have been performed using Matlab®.