In China Southern Power Grid， the well-developed control performance standard（CPS） is employed to assess the automatic generation control（AGC） operation performance of the dispatching centers at the provincial level， and on this basis an economic penalty mechanism is established. Given this background， by adding a capacity coefficient to the CPS formulas， the CPS assessment method is extended to accommodate generation units， and a new approach for assessing the AGC operation performance of generation units is developed. The penalty for each provincial dispatching center， in the form of electricity amount， is then allocated to the generation units based on the assessment outcomes， and as a result， this could provide an efficient incentive for those units to improve their operation performance. The proposed approach is consistent with the existing CPS assessment framework， and its emphasis is placed on the long-term regulation operation performance of the generation units. In this way， the AGC dynamic operation indices， such as the regulation rates and regulation accuracy， are not required， and hence the method could be implemented easily in actual power systems.