The paper reports on the testing and implementation of a Merging Unit (MU) that combines a low cost data acquisition module with the communication processor specially programmed to support IEC61850-9-2 Process Bus protocols and IEEE1588 Precision Time Protocol (PTP). The unit, in conjunction with other Intelligent Electronic Devices (IEDs) installed on the process and substation busses can be used in the next generation of the synchronized dynamic measurement systems. With the reference to the most challenging problem of tracking dynamic phenomena, Kalman Filter is proposed in this paper to be used in the centralized computation of synchrophasors in a substation. Such system can enhance the power system state estimation and mitigating the problems of installing new dedicated PMUs due to the high cost. Representative results in testing the synchrophasor computation method are presented in the paper.