In this paper, an experiment involving a sudden generator disconnection in Faroe Islands power system is described. Three phase voltage and current signals were measured during the experiment. A novel parameter estimator based on Unscented Transformation (UT) and Kalman filter is implemented to estimate frequency and amplitude of the processed signals simultaneously. By avoiding the use of linearization procedures, UKF performs high estimation accuracy and lower computational demand compare to classical methods (i.e. FFT and EKF). This method has shown its immunity to high level of noise and is applicable for monitoring and protection purpose in power systems.