This paper presents a new procedure for allocating transmission losses to g
enerators and loads in the context of pools operated under a single margina
l price derived from a merit-order approach. The procedure is based on the
network Z-bus matrix, although all required computations exploit the sparse
Y-bus matrix. One innovative feature and advantage of this method is that,
unlike other proposed approaches, it exploits the full set of network equa
tions and does not require any simplifying assumptions. The method is based
on a solved load flow and is easily understood and implemented. The loss a
llocation process emphasizes current rather than power injections, an appro
ach that is intuitively reasonable and leads to a natural separation of sys
tem losses among the network buses. Results illustrate the consistency of t
he new allocation process with expected results and with the performance of
other methods.