The power transmission costs, which are charged to the market participants, are a central issue of the new deregulated electricity markets. The paper presents a methodology for transmission cost allocation based on the principle of proportional sharing states that any power flow leaving a bus is made up of the flows entering that bus in a proportional manner, thus satisfying Kirchhoff first law. A properly established cost provides economical signals for short-term and long-term recovery current expenses and for a fair cost allocation to market participants. An original method of transmission cost allocation considering the power losses is proposed. The appropriate software tool has been developed in Mathematica environment. The results are presented and analyzed for the Test 25 test power system.