In the previous studies the effect of Static Var Compensator (SVC) and Power System Stabilizers (PSS) has not been considered especially for various faults in a three phase system. For improvement in inductive and capacitive power flows Shunt Flexible AC Transmission System (FACTS) devices can be used and when they are placed in the centre of transmission line of a electrical power transmission network. We made models with different FACTS devices and also varied their location for reducing fluctuations in voltage and improvement in transient stability. We have found that, shunt Static Var Compensator are best, so we have continued our research using shunt SVC. Again during our study we have found that if we slightly change the position of FACTS devices towards generator performance of the system improves but it eventually depends on load either local or of overall system. The work described here illustrates modeling of a simple transmission system containing two hydraulic power plants. A static var compensator (SVC) and power system stabilizers (PSS) are used to improve transient stability and power oscillation damping of the system. The power system illustrated in this thesis is quite simple. However, the phasor simulation method allows the user to simulate more complex power grids. We have used MATLAB for the study of the system.