This paper presents a controller based on the principle of Dual Mode in designing the load frequency controller. Case studies justify that Dual Mode based conventional controller yields more improved control performance than the commonly used Integral Controller. Open transmission access and the evolving of more socialized companies for generation, transmission and distribution affects the formulation of AGC problem to accommodate new constraints associated with territorial of the traditional AGC two area system is modified to take into account the role of AGC in open market system functionality of each company.  So the traditional AGC two-area system is modified to take into account the effect of bilateral contracts on the dynamics.  The concept of Disco Participation Matrix to simulate these bilateral contracts is introduced and reflected in the two-area block diagram. The proposed controllers are tested for a two area single reheat system with considering the practical aspect of the problem such as Deadband and Generation rate constraint (GRC).  Simulation results show that the limitations of Integral Controller can be over come by including the Dual Mode PI controller and thereby the response of frequency and tie line power can be improved substantially following a load change in any area.