More and more system operators are interested in calculating transfer capability in realtime using real-time power flow models generated from the Energy Management System (EMS). However, compared to off-line study models, EMS models usually cover only a limited portion of the interconnected system. In most situations, it is not practical to extend the EMS model to capture the impact of the external systems and therefore using an equivalent network becomes necessary.The development of equivalent circuits to represent external areas was a topic discussed over the last 50 years. Almost all of these methods require impedance information about the external area to develop the equivalent circuit. Unfortunately utilities do not have the external impedance information in the real-time. Therefore, normal industry practice is to use off-line studies to develop an equivalent circuit and use that circuit in the real-time operation without any validation. This can result in errors in the security assessment. Therefore, power industry need a method to develop or validate an equivalent circuit based on the available real-time information. This thesis work is focussed on meeting that industry need.The work on this thesis presents two new methods that can be used to generate an equivalent circuit based on the boundary conditions. This method involves calculating equivalent impedance between two areas based on the boundary stations voltages, voltage angles and power leaving the boundary stations into external areas.This thesis uses power system simulation between two areas to change the system condition to obtain different boundary bus voltages, voltage angles and power injections to generate necessary data. Regression analysis and least square method is then used to generate the equivalent circuit using these data. It is expected that system changes will provide necessary information in the real-time to generate the equivalent circuit.The proposed methodology is validated with modified three area 300 bus system as well as using Manitoba Hydro's system. Contingency analysis, transfer level calculation and PV curves analysis is used to validate the proposed method. Simulation results show that the proposed method produces adequate accuracy in comparison with detailed off-line system models.The main advantage of the proposed method as compared to other existing methods such as Ward and REI is that the proposed method does not require external impedance information to generate the equivalent circuit. The ability to generate reasonably good equivalent circuit only using available boundary information will help utilities to generate or validate the equivalent circuit based on the current system conditions, which will intern help improve the accuracy of the security assessment.i Acknowledgments I would like to express my appreciation and sincere thanks to Udaya Annakkage, my research advisor, for his guidance, support and advice throughout this research. I was truly enriched by the many discussions we had over the course of thi...