The document presents a new methodology for allocating active power transmission losses in deregulated power systems, addressing the challenges posed by the non-linear nature of power loss allocation. This method divides lossy transmission lines into sub-lines based on load connections and utilizes a proportional sharing technique to trace power flow, leading to a fair allocation of losses to the respective loads. The proposed method demonstrates improved accuracy over existing techniques when applied to various test systems, including a six-bus system and larger bus configurations.