Abstract—This paper presents a practical scheme that can be used for allocating the transmission loss to generators and loads. In this scheme first the share of a generator or load on the current through a branch is determined using Z-bus modified matrix. Then the current components are decomposed and the branch loss allocation is obtained. A motivation of proposed scheme is to improve the results of Z-bus method and to reach more fair allocation. The proposed scheme has been implemented and tested on several networks. To achieve practical and applicable results, the proposed scheme is simulated and compared on the transmission network (400kv) of Khorasan region in Iran and the 14-bus standard IEEE network. The results show that the proposed scheme is comprehensive and fair to allocating the energy losses of a power market to its participants. Keywords—Transmission Loss, Loss Allocation, Z-bus modified matrix, current Components Decomposition and Restructured Power Systems I. INTRODUCTION HE transmission loss contributes to a small fraction of the total transmission costs. However, this small proportion is still notable, since it can propose great effects on the decisions the power market participants make. As a result, a proper loss allocation method, whose purpose is to allocate each generator and/or load a fraction of losses, will have substantial influences on the market functions. The previous monopolistic structure used a simple pricing scheme based on a uniform distribution of the approximated loss of 2% to 5% of generated power. This simple loss allocation, however, is not sufficient for the restructured electricity market as it does not encourage competition between market participants [1]. Power loss is the quadratic function of power flows. As a result, it has a nonlinear nature, which makes it impossible to unbundle the power loss in a way that assures the fraction of loss given to every generator or load is exactly the amount of loss that generator or load causes. This also results in lack of a standard criterion for evaluating the efficiency of different loss allocation techniques. It is important to note that loss allocation does not change power flows. It only determines how to distribute loss cost M. R. Ebrahimi is with Sama Technical and Vocational College Islamic Azad University,Tehran Branch, Tehran-Iran (email: Mr_ebrahimi@alum.sharif.edu) M. Ehsan is with the Department of Electrical Engineering, Sharif University of Technology, Azadi Ave, Tehran, Iran (email: ehsan@sharif.edu) among generators and loads of system. In other words, loss allocation follows the power flow process and the total system loss is determined by the latter one. However, loss allocation changes the planning and expansion policies. For instance, a loss allocation method, like pro rata, which is merely based on the power level of a generation or consumption unit, does not encourage new generation units to be installed near load centers and hence increases total system loss. This will result in an inequitable loss allocation, since the other market participants will have to pay for a loss cost which is only due to an improper loss allocation method. In contrast, an equitable loss allocation method, which rewards the loads located in areas of high generation and the generators in areas of high load profile, will conduct the planning policies of system agents in a more proper manner. There are several issues which should be considered for a loss allocation method, such as clarity and fairness. A fair loss allocation technique distributes the total loss among the generators and loads according to their transmission network usage. The loss allocation should be not only considered fair by most of the system participants, but also simple to be performed. Several methods have been proposed for loss allocation, such as Pro-Rata, Proportional Sharing (PS) [6-8], Incremental Transmission Loss (ITL) [9], Loss Weight Factor (LWF) allocation method [10], and Z-bus method [4]. The incremental transmission loss allocation, which is based on how a slight change in power injections at a single bus affect system losses, depends on the choice of the slack generator and the direct application of the coefficients typically results in over-recovery of losses. The proportional sharing method is based on the proportional sharing principle, which assumes that the inflows are proportionally shared among the outflows at each network node. LWF loss allocation method is based on tracing the power of a particular load or generator. Z-bus method, which is based on the network z-bus matrix, does not require any simplifying assumptions. In this paper, a practical scheme for allocating the transmission loss to the generators and loads is rendered which is based on using the Z-bus method and the Z-bus modified matrix. A Practical Scheme for Transmission Loss Allocation to Generators and Loads in Restructured Power Systems M.R. Ebrahimi and M. Ehsan T World Academy of Science, Engineering and Technology International Journal of Electrical and Computer Engineering Vol:5, No:7, 2011 814 International Scholarly and Scientific Research & Innovation 5(7) 2011 scholar.waset.org/1307-6892/10535 International Science Index, Electrical and Computer Engineering Vol:5, No:7, 2011 waset.org/Publication/10535