The UPFC (unified power flow controller) is one of the modern power electronics devices that can be used for the control of real and reactive power in a transmission line. The UPFC uses VSC (voltage sourced converter) technology to inject a series voltage with the sending end ac source to achieve its control objective with high speed, making it suitable for maintaining the voltage and mechanical stability of a network. There are frequent disturbances in a power system due to its dynamic nature. These disturbances must be controlled so that they cannot lead the system to an unsteady condition. Recently developed FACTS (flexible alternating current transmission system) provide steadfast solutions to avert these issues in power quality. Due to the improvements in these solutions, some critical issues have been come to sight pertaining to power quality, dependability and permanence. The most effective and potential technologies among recently developed FACTS devices are STATCOM (static synchronous compensator) and UPFC (unified power flow controller) that can significantly enhance the operations of power systems and associated power quality problems. In order to control entire flow of load and voltage sags/flickers; while eliminating harmonics simultaneously, this paper presents an inventive systematic approach on the basis of optimal control and tracking with a PI (proportional integral) controller, the desired steady state behavior, and a linear quadratic tracker. Moreover, a MATLAB/Simulink model is also established in the paper for the UPFC in the environment of Simulink, once its principles are analyzed. After monitoring the simulation results, it was concluded that UPFC based controller systems can efficiently manage the load flow and voltage sags/flickers. Test results using different power system models are presented throughout the thesis to illustrate the effectiveness of Unified Power Flow Controller. (C) 2015 Elsevier Ltd. All rights reserved.