Abstract The price allocation of transmission line usage for an open access system considering Integrated Nepal Power System (INPS) has been discussed in this paper using the MVA (mega volt ampere) - KM (kilometer) and MVA cost method. The price allocation has been compared for INPS (Integrated Nepal Power System) and IEEE 14 bus system. The transmission line costs in IEEE 14 bus system is based on average construction and operation cost whereas, the costs in the INPS is an actual cost of the present transmission system. The price has been first calculated for different bus with reference to slack bus and for different bilateral and multilateral transactions, using MW KM - MW cost and MVA KM - MVA cost methods. The active and apparent powers for the base case and transaction cases have been calculated using Newton Raphson Method. The prices from MVA KM - MVA cost method are higher than MW KM - MW cost method for both bilateral transaction and multi-lateral transaction indicating more reactive power support in addition to the real power loading due to transactions in the system. The result shows that MVA KM - MVA cost method requires incentives for reactive power support to the system such as INPS.