Erosion, roughness, steam path damage, etc., are factors that reduce power capacity in a steam turbine. Any power loss occurring locally in intermediate stages of a steam turbine results in more available energy in the downstream stages, this effect is well known as the Loss Factor (Salisbury, 1974; Stodola, 1927; Husain, 1984). Currently, the Loss Factor is been calculated by graphical methods (Cotton, 1996). In this work a new thermodynamic expression for the Loss Factor (LF) is introduced, in order to improve applications to evaluate malfunctions in the first and intermediate stages of steam turbines. The new thermodynamic expression for the Loss Factor, is based on Second Law Analysis; and concepts like the internal parameter θ, and the dissipation temperature Td; (Royo, 1992). An Example of a steam turbine in a conventional power plant of 158 MW is analyzed by comparing a classical graphical method (ASME/ANSI PTC-6, 1970; and Cotton, 1993), and the proposed expression of the Loss Factor (LF). Special emphasis is made on the thermoeconomical deviations that could arise by an imprecise application of the Loss Factor Method, during an energy audit of the steam turbine internal parts.