The deregulation problem has recently attracted attentions in a competitive electric power market, where the cost must be earmarked fairly and precisely for the customers and the Independent Power Producers (IPPs) as well. Transmission loss is an one of several important factors that determines power transmission cost. Because the cost caused by transmission losses is about $3{sim}5%$, it is important to allocate transmission losses into each bus in a power system. This paper presents the new algorithm to allocate transmission losses based on an integration method using the loss sensitivity. It provides the buswise incremental transmission losses through the calculation of load ratios considering the transaction strategy of an overall system. The performance of the proposed algorithm is evaluated by the case studies carried out on the WSCC 9-bus and IEEE 14-bus systems.