The re-engineering of ELECTRICITY SUPPLY INDUSTRY (ESI) started in 20th century introduced non-interference and succeeding open access policy in electricity. And this restructured system brought competition in energy market. This modification incorporates of two characteristics that are coupled with each other; re-engineering and denationalization. due to this change, some difficulties and provocation have dropped up. Among all the problems, the issue of power losses distribution assumes significance. Distribution of distribution loss has become a controversial matter among the electricity builder and Clint. When electrical energy is communicated through a meshwork, it will cause energy losses. And generating unit produce more energy to repay these losses. And cause of deregulation and competition, no generating unit would like to generate more power to repay losses. Logically, both generators and consumers are expected to pay for losses. It is identified technique to shank this difficulty, then there is a possibility that the Independent System Operator (ISO) which is a profitless operation will be responsible for these power losses. It should be the operating units who should cover up these losses. This dissertation work focuses on presenting a strategy for loss allocation among the generating units. A distribution loss doesn’t exist due to reality that distribution loss is extremely down result of network states and it is a unbreakable quantity.

Keywords : Transmission Loss Allocation, ESI ,ISO.