The electric power infrastructure that has served huge loads for so long is rapidly running up against many limitations. Out of many challenges it is to operate the power system in secure manner so that the operation constraints are fulfilled under both normal and contingent conditions. Smart grid technology offers valuable techniques that can be deployed within the very near future or which are already deployed nowadays. Flexible AC Transmission Systems (FACTS) devices have been introduced to solve various power system problems. In literature, most of the methods proposed for sizing the FACTS devices only consider the normal operating conditions of power systems. Consequently, some transmission lines are heavily loaded in contingency case and the system voltage stability becomes a power transfer-limiting factor. This paper presents a technique for determining the proper rating/size of FACTS devices, namely the Static Synchronous Compensator (STATCOM), while considering contingency cases. The paper also verifies that the weakest bus determined by eigenvalue and eigenvectors method is the best location for STATCOM. The rating of STATCOM is specified according to the required reactive power needed to improve voltage stability under normal and contingency cases. Two case system studies are investigated: a simple 5-bus system and the IEEE 14-bus system. The obtained results verify that the rating of STATCOM can be determined according to the worst contingency case, and through proper control it can still be effective for normal and other contingency cases.