A system and method for operating a Unified Power Flow Controller (UPFC) connected to a SCADA (Supervisory Control and Data Acquisition) are disclosed. The UPFC automatic operation system receives power system data from the SCADA system, automatically determines UPFC's optimum operation conditions according to power system states. The system includes: a UPFC acting as a serial/parallel FACTS to control variables of a power system; a SCADA for periodically acquiring line data of the power system and state data of the UPFC; and an upper controller for analyzing data received from the SCADA, and determining an UPFC's optimum operation mode for each power system condition and UPFC's optimum set-point control commands.