Modern power systems are very complex and to model them completely is impractical for electromagnetic transient studies. Therefore areas outside the immediate area of interest must be represented by some form of Frequency Dependent Network Equivalent (FDNE). In this paper a method for developing Frequency Dependent AC system Equivalent (FDACSE) using Z-domain rational Function Fitting is presented and demonstrated. The FDACSE is generated by Linearized Least Squares Fitting(LSF) of the frequency response of a Z-domain formulation. This 1 & 2 port FDACSE have been applied to the New Zealand South Island AC power system. The electromagnetic transient package PSCAD/EMTDC is used to assess the transient response of the 1 & 2 port FDACSE developed under different condition (linear load, fault and nonlinear loading). The study results have indicated the robustness and accuracy of 1 & 2 port FDACSE for electromagnetic transient studies.