The analysis of life cycle costs (LCC) plays a key role in the concept of life cycle management． In or-der to develop a more precise LCC model for the power grid and its main equipment，the inflation rate prediction method and the loss conducting model are introduced into the LCC model． Based on the power grid characteristics that the increase of total loss will cause the cost of generation side to increase and the loss of subordinate power grid will lead to the raise of the comprehensive investment of above grid，a power grid loss conducting model is pro-posed，and a method to calculate the loss conducting cost-to-LCC ratio is put forward． In addition，the inflation rate is predicted by using the autoregressive integrated moving average (ARIMA) model． Then，the loss distribution in each part of a typical power grid is analyzed based on the above LCC model，and the necessity and importance of the energy conservation in the power distribution grid are pointed out． Finally，a case study on the influence of the loss conducting cost on the LCC is performed，which proves that the proposed loss conducting model is of practical value．