Transmission cost allocation is an emerging topic of interest in the deregulated power system. In this paper, co-operative game theory concepts such as Shapley value, Tau value, Nucleolus and Proportional Nucleolus methods are applied for analyzing the allocation of transmission cost among the players. Studies on transmission cost allocation based on Shapley and Nucleolus have been done earlier. The Proportional Nucleolus which works on extended core concept is utilized in the co-operative game for allocating transmission cost to the players and gives solution for co-operative games in the empty-core environment also. The structure of the game and its fairness is also discussed in this paper. The transmission cost allocation based on the co-operative game methods are systematically analyzed and compared with existing tracing methods. The proposed methods are carried out by illustrating on the sample six bus system. The paper emphasis the proportional nucleolus of co-operative game theory is the best suitable method for allocating transmission costs.