At present, the transmission system is a business unit belonging to the Electricity Generating Authority of Thailand (EGAT) in the vertically integrated power system structure. According to the privatization plan of Thailand electricity supply industry (ESI), by the year 2003, a grid company (GridCo) will be a subsidiary of EGAT holding company. This paper presents a transmission pricing method based on electricity tracing which is applicable to the EGAT existing transmission business unit (from 1997 to 2003) and third party access to GridCo through bilateral transaction (from 2003 onwards). It consists of three components: delivery charge, demand charge, and connection charge. The proposed transmission pricing method is tested on the EGAT main transmission system. Test results indicate that the proposed transmission pricing method can fairly and effectively recover the associated cost and provide the correct pricing incentive to generators and large consumers.