Erosion, roughness, steam path damage etc., are factors that reduce the power capacity in a steam turbine (ST). Any power loss occurring locally in intermediate stages of a ST results in more available energy in the downstream stages. This effect is well known as the loss factor (LF) [Steam Turbines and Their Cycles, Krieger, NY, USA, 1974; Steam and Gas Turbines, McGraw-Hill, NY, USA, 1927; Steam Turbines Theory and Design, McGraw-Hill, NY, USA, 1984]. Currently, it is calculated by graphical methods [Evaluting and Improving Steam Turbine Performance, Gilson, NY, USA, 1993]. In this work, a new thermodynamic expression for the LF is introduced in order to improve applications to evaluate malfunctions in the first and intermediate stages of STs. The proposed thermodynamic expression for the LF is based on second law analysis and concepts like the internal parameter 0, and the dissipation temperature T-d [Las Ecuaciones Caracteristicas, Doctoral Thesis, University of Zaragoza, 1992]. To show the main features and easiness of application of the proposed method, a 158 MW conventional power plant is analyzed, comparing the classical graphical method [Evaluating and Improving Steam Turbine performance, Gilson, NY, USA, 1993; Simplified Performance Test of Steam Turbines, ASME, NY, USA, 1970] and the proposed expression of the LF. Special emphasis is made on the thermoeconomical deviations that could arise by an imprecise application of the LF Method during an energy audit of the steam turbine internal parts.