Abstract The existing HVDC scheme connecting the North Island and the South Island of New Zealand is currently being upgraded. During this upgrade also known as the New Zealand Inter Island HVDC Pole 3 Project, the existing HVDC Pole 1 based on mercury arc valves is replaced by a new HVDC Pole 3 based on light triggered thyristor vales. Both poles, the existing Pole 2 and the new Pole 3 are then operated as a non balanced bipolar HVDC scheme. In this study, a power system stability analysis of the HVDC Pole 2 and Pole 3 connecting the North Island and the South Island is performed. Focus is hereby on the design of special power modulation controller to enhance the dynamic performance of the entire interconnected power system, especially during and shortly after faults and severe contingencies. The proposed modulation control functions are designed for frequency and transient AC voltage support.