In this paper, a new method to incorporating FACTS devices in optimal power flow (OPF) problem is presented. This method can provide an enhanced economic solution with the use of controllable FACTS devices. Two types of FACTS devices, thyristor controlled series compensators (TCSC) and thyristor controlled phase shifters (TCPS), are considered in this method. The specified power flow control constraints due to the use of FACTS devices are included in the OPF problem. The proposed method decomposes the solution of such modified OPF problem into two subproblems' iteration. The first subproblem is a power flow control problem and the second subproblem is a conventional OPF problem. The two subproblems are solved iteratively until convergence. Case studies are presented to show the effectiveness of the proposed method.