260 Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. Chapter 9 DOI: 10.4018/978-1-4666-7258-1.ch009 ABSTRACT The direct focus of this chapter is to explore the potential of online Adaptive NeuroFuzzy Type-2 (ANFT2) control system for damping inter-area oscillations using Static Synchronous Compensator (STATCOM). The nonlinear ANFT2-based direct control scheme is proposed to damp inter-area oscillations by utiliz- ing its model free and universal approximation capabilities. The Gaussian and triangular membership functions with diferent variations of uncertain mean and standard deviation are considered for ANFT2. The adaptation mechanism utilizes gradient descent-based back-propagation algorithm using Lyapunov stability criteria to update the rule parameters. The performance evaluation of proposed control strategy has been validated using two and three machine power systems. The nonlinear time domain simulations reveal that ANFT2 has excellent damping capabilities as compared to conventional PI control. Simulation results for diferent performance indices further emphasize the optimal performance of ANFT2 with uncertain mean and variance of triangular membership function in transient and steady state region. Comparison of Uncertainties in Membership Function of Adaptive Lyapunov NeuroFuzzy-2 for Damping Power Oscillations Laiq Khan COMSATS Institute of Information Technology, Pakistan Rabiah Badar COMSATS Institute of Information Technology, Pakistan Saima Ali COMSATS Institute of Information Technology, Pakistan Umar Farid COMSATS Institute of Information Technology, Pakistan