In the current pricing mechanism of China's electricity transmission and distribution sectors， changes in system losses due to generation right trading will affect the financial interests of the power grid company. The incremental loss responsibility of transaction subjects should be clear so that reasonable compensation to power grid companies can be made. In order to do so， the current loss compensation method is described on generation right trading and its major problems are analyzed. Given that the generation trading mode is mainly on an annual basis in China， and based on the planned power dispatch model， a new method is proposed to calculate the annual incremental losses and its allocation. The incremental loss is calculated according to the changes of system loss in having or not having generation right trades and allocated based on the changes of system loss by a slight increase power of the node in substitute side and a slight decrease power of the node in replaced side. Finally， the number of typical power grid operation mode is selected， and the calculation and allocation of annual incremental loss are achieved. By combining with the examples of generation right trades in 2009 of a grid in China and comparing with the existing loss compensation methods， it is shown that the loss responsibility of transaction subjects determined by this method is consistent with the actual power system loss.