The effect of outages in transmission lines and generator units can be predictable for stable and reliable operation of power system through contingency assessment. Hence, contingency assessment is an important task for stable and effective operation of power system. In this paper, a method of placement of interline power flow controller (IPFC) based on the probability of severity has been proposed. Contingency ranking of lines has been done using Composite Severity Index which is a probabilistic based strategy for the placement of IPFC. IPFC is placed on the line with highest probability of severity during the occurrence of different outages. Thereafter, the size of the IPFC was optimized using cuckoo search algorithm. The proposed methodology has been applied on the IEEE 14 bus system data and results presented. The system overall CSI, active and reactive power were reduced by 7.31%, 10.17% and 14.46% respectively. The results show that optimal placement of IPFC effectively reduces line congestion, improves voltage stability and reduces the active and reactive power loss of the system.Keyword- Power Flow, line utilization factor, severity index, Contingency Management
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