This paper presents a comprehensive study on the wind power impact with increasing penetration on frequency stabilization in restructured power system scenario. The focus of the study is on faster and smoother settlement of frequency and tie-line power. A large penetration of wind power generation causes imbalance in power system because of its intermittent output. The wind power generation system does not provide inertia and isolates from the grid during disturbances but this possibility becomes milder if wind power generators also contribute to system inertia. The proposed control scheme with fuzzy logic uses frequency deviations to provide fast active power support, which blocks the fall in frequency and tie-line power during transient conditions. The simulation studies have been conducted in a two-area interconnected power system in restructured environment.