A switching control strategy is proposed for the stabilization of the simplest form of a power system. The underlying switching control strategy is represented by the pulsed addition of an inductive impedance to the transmission line, through a suitable and well-known arrangement of switching thyristors. It is proved that there exists a local stabilizing sliding mode. The energy function of the system is used as a Lyapunov function to derive a switching control which guarantees the reachability of the sliding surface from the stability region. The switching control scheme is also implemented via a reduced-order nonlinear observer based on exact error linearization achieved through nonlinear output injection. Numerical simulations are presented.