This paper outlines how the on-line performance monitoring system can be used to improve the efficiency and maintenance of the equipments. And a method of the heat rate allocation to each equipment was suggested to monitor the performance of combined cycle power plants. This calculates the expected heat rate of current conditions and compares it with actual values. Loss allocation in heat rate is reconciled by calculating the magnitude of the deficiency contributed by major components, such as the gas turbine, heat recovery steam generator, steam turbine and condenser. Expected power output is determined by a detailed model and correction curves of the plant. This simulation models are found to reproduce high accuracy in behavior of the cycle for various operating conditions, both in design and in off-design condition. Errors are lower than 2% in most cases.