This paper investigates the use of self-tuning Linear Quadratic Gaussian control with Loop Transfer Recovery (LQG/LTR), applied in Thyristor Controlled Series Capacitors (TCSC) installed in interconnected power systems. The proposed robust adaptive controller can improve power system stability margins, damping properly the system's dominant electromechanical modes. Although this TCSC controller is designed mainly to identify and damp inter-area modes, it does not affect negatively the local modes damping, therefore enhancing the overall system performance. The proposed controller properties can be verified using non-linear simulations for a four-machine power system, in different operation conditions.