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In this paper, the application of Interline Power Flow Controller (IPFC) in damping of low frequency oscillations is investigated. An extended Heffron-Phillips model of a single machine infinite bus (SMIB) system is used to analyze the damping torque contribution of the IPFC in power systems. The potential of various IPFC control signals upon the power system oscillation stability is investigated under various loading conditions. Simulation results demonstrate the effectiveness of IPFC controllers on damping low frequency oscillations.