The paper describes a new method to generate the reactance reference for a TCSC, which has been installed in order to provide damping in a power system. The knowledge of the expected oscillation frequency in the power system is used to create a coordinate system, which rotates with that frequency. In this coordinate system a phasor representing the power swing is being extracted from the input power signal. A reactance reference signal with arbitrary gain and phase shift can easily be created using the phasor. The phase of the reactance reference is preserved during limiting. Gain and phase-shift may comfortably be scheduled due to measured parameters like average power, power swing amplitude etc. Frequency compensation has been implemented, and adapts the frequency in the measuring system when a power oscillation occurs. The new approach has been implemented and successfully tested in the North-South Interconnection in Brazil in March 1999 and has been in operation since then. The scheme is applicable for PSS and other FACTS damping systems.