This paper introduces a new method to allocate real power loss caused by generators and loads using modified nodal equations. Based on solved load flow results, the method partitions the Y-bus matrix to decompose the current of the load buses as a function of the generators' current and load voltages. Then it uses the modified admittance matrix to decompose the load voltage dependent term into components of generator dependent terms. By using these two decompositions of current and voltage terms, the real power loss allocations caused by the generators are obtained. Similarly, in case of real power loss allocations caused by the loads, the generator voltage dependent term can be decomposed into components of load dependent terms. Likewise, by using these two decompositions, the real power loss allocations caused by the loads are determined. The proposed method is illustrated on a simple 5-bus system and tested on the modified IEEE 30-bus system. The proposed methodology provides reasonable and accurate results to real power loss allocation. Conference title: 19th Australasian Universities Power Engineering Conference: Sustainable Energy Technologies and Systems 27-30 September 2009.