Phase-shifting transformers offer the opportunity to partially control the flows in an electricity network. In the U.S. electricity industry, these devices currently operate under decentralized private ownership. This pattern, coupled with a commercial trading regime based on the contract path concept, creates potential inefficiencies. There is currently litigation at FERC over proposals to coordinate phase shifter operation in the WSCC. PWP-035 summarizes that litigation and illustrates the basic interactions in a simple four node model that is based broadly on conditions in the WSCC region. In addition to the potential inefficiencies of decentralized phase shifter operation, Baldick and Kahn also show how they can enhance the overall utilization of the network. They compare regulatory approaches to managing these issues with more extensive structural reform of electricity trade.