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In electric power systems, system no remain in secure operating state due to increased power demand. On other hand, the power system stability has been recognized as an important problem for its secure operation. Several methods are being used conventionally to improve operating margins necessary for system stability. Many of these suffer with excessive response time and considerable amount of power loss. To overcome this difficulty, a rapid development of power electronic devices such as Flexible AC Transmission System (FACTS) devices are used, their primary application is to enhance power transfer capabilities, power system stability and allow more flexible control of power flows. By installing FACTS equipment at optimal sites, the overall system benefits are sought. But the location of these FACTS devices has been big challenge. This challenge is overcome by using Sensitivity Indices analysis method. Here two Sensitivity Indices analysis methods are used and these are; reduction of total system reactive power loss and real power flow performance index sensitivity indices. The 'MATLAB' software is used here to write a programming code for finding out the sensitivity indices for both methods. IEEE-14 bus system is used here for the study purpose.

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