A power system is disclosed. The power system may have an engine, a generator, a monitoring device configured to monitor the generator and to generate a signal, and a performance module configured to provide an alarm and a shutdown command to the engine based on the signal. The power system may further have a switching device with a first condition and a second condition. When the first condition of the switching device is active, the performance module may be overridden, the engine may be operated at a reduced speed and load output, and the generator may be inhibited from producing electrical power. When the second condition of the switching device is active, the performance module may affect operation of the power system, the engine may be operated at an elevated speed and load output, and the generator may be allowed to produce electrical power directed to the external load.