Hybrid system has been modeled in MATLAB/SIMULINK environment which is then integrated with two generators based power system. The work has done over analysis of THD level in voltage output from the hybrid system with various controls being proposed for the power system stabilizer. Various controls like PI-Hysteresis, particle swarm optimization (PSO) and PSO with neural network (NN) have been implemented for comparative study. It was found that the distortion level in voltage output waveform was least in stabilizer having PSO-NN control which is 3.36%. Also the active power enhancement reached a whooping value of 9.4 KW from the hybrid system.