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Power system control is an important issue with regard to power system safety, flexibility, and reliability. Over the years, various new power system control strategies have been explored, but the main disadvantage of these control strategies is their complexity in structures with respect to industrially applied PID controller. The present paper introduces a novel control strategy based on modified disturbance rejection control, which is a modification of the PID controller that not only preserves the simplicity of control design but also offers an effective control based on state observer-based control law. The proposed control strategy addresses some basic limitations of a PID controller and implements modified control law to remove these limitations. In order to prove the effective control of the proposed control strategy, a standard IEEE-39 bus power system integrated with renewable energy generations is developed, and a comparative analysis of the proposed controller is performed with respect to its ancestor controllers. The comparison is validated based on the system dynamic responses like frequency and tie-line power deviations when the power system is subjected to different disturbances. Furthermore, the power system is integrated with electric vehices (EVs) in vehicle-to-grid (V2G) mode in order to ascertain the effect of EVs when used in V2G mode. A novel study is carried out in which the optimal location of EVs in the power system is determined based on the enhancement in stability of the power system by EVs. The analyses are carried out in MATLAB Simulink software. Simulation reports reflect the optimal control action of the proposed controller with respect to already established strategies projected in the literature. Moreover, the results illustrate that EVs when connected in Area 1 and Area 3 of the power system, the system deviations and steady-state errors are much less as compared to the other cases.