Owing to nonlinear structure and uncertain load demand characteristics, expert and intelligent automatic generation control (AGC) is inevitable for coherent operation and control of electric power system. Hence, in this paper, to mitigate the frequency and power deviations efficiently under sudden load demand conditions, a novel fractional-order fuzzy PID (FOFPID) controller is suggested in AGC of restructured multi-area multi-source hydrothermal power systems. The parameters of FOFPID controller are optimized by utilizing bacterial foraging optimization algorithm. The controller is implemented on restructured two- and three-area systems. It is observed that the advocated method shows superiority over fuzzy PID, fractional-order PID and conventional PID control schemes. Energy storage units such as redox flow batteries (RFB) which show extremely long charge–discharge life cycle and outstanding quick response to alleviate the system oscillations under disturbances have further been incorporated into the studied systems to analyze their efficacy in boosting AGC performance. Analysis of results reveals that with RFB, system transient performance improves significantly. It is also observed that the obtained results satiate the AGC requirement under different power transactions taking place in a deregulated market in the presence/absence of appropriate generation rate constraint treated for thermal and hydro plants. Finally, the robustness of the presented approach is demonstrated against the wide variations in the system parameters and initial loading condition.