Contents I. INTRODUCTION
The issue of power losses is always disputable in the deregulated environment, whether for the compensation in the network or in dealing with the transmission pricing problem. In this era of deregulation, the introduction of an efficient pricing strategy is essential to satisfy all users of the transmission network [1]. A satisfactory pricing strategy should have the following features; charge the user for the actual utilization of the grid; It provides signals to new power plants about best locations that can relieve transmission congestion and losses; predictable; simple and easy to implement and ensure recovery of the total transmission revenue [2]. It should be emphasized that in order to achieve accurate transmission pricing, a transparent method for allocating transmission losses between interested parties in a fair manner is required. Unfortunately, owing to nonlinear nature of the power flow equations, it is not an easy task to identify the source and the cause of losses. For this reason, many approximate models and algorithms have been introduced in the literature that tried as accurate as possible to identify and allocate the cost of losses to each participant in the transmission network. In this paper, the discussion is focused on the loss cost allocation due to the Power Quality (PQ) problem. Power quality problem is one aspect that may affect the ability of the facility within the power system and also the efficiency of electricity distribution from generation sources to the consumer. The IEEE Standard 519–1992, has become a standard of PQ associated with the harmonic distortion caused by the source or load. This standard establishes a maximum limit of 5% for the current and voltage [4]. Total Harmonic Distortion factor (THD) indicates the amount of content of harmonic components in current or voltage waveform.
