One of the major challenges in deregulated power system is determination of Available Transfer Capability on the interconnected transmission lines. It is necessary to determine and accurately gauge the transfer capability remaining in the lines for further transactions, ATC determination methodology that enables one to evaluate the realistic transmission transfer capability by accounting for all related important requirements. The assessment of ATC gives valuable information to the system operator regarding the ability of an interconnected network to reliably transfer bulk power between two nodes or between different areas of the network without causing threat to system reliability. There are several methods to find ATC in deregulated system. The proposed computation of the ATC using AC power transfer distribution factors (ACPTDFs) and to determine the shortest path for the power flow between buyer and seller which is implemented by shortest path algorithm were discussed. ATC calculation of IEEE-5 bus have been simulated by using Power world simulator and the results have been presented by considering PTDF/OTDF factor and shortest path between buyer and seller is determined by considering the line impedance as parameter simulation is carried out using MATLAB
