Abstract The modern trend is to saturate alternators. The object of the present paper is to study the dynamic behaviour of a power plant connected to an infinite bus, taking saturation into account. The machine model includes cross-saturation between the d and q axes. It is shown that saturation does not modify oscillation frequency, but considerably increases time constants. The influence of the gains of the AVR and stabilizer on the dynamic stability limits in the (P, Q) plane is demonstrated for the case of a saturated machine.