Why the comparison is hard
Comparing a heat pump with a gas furnace confuses people because the two are sold in different units. Electricity is priced per kilowatt-hour, gas per therm or per cubic metre, and neither tells you what it costs to keep a house warm.
The fix is to convert both to the same thing: dollars per million BTU of heat actually delivered into the house. Once both fuels are in those units, the comparison is a single subtraction.
The two formulas
Gas furnace. One therm is 100,000 BTU, so a million BTU is ten therms. A furnace is not perfectly efficient, so divide by its AFUE:
Cost per million BTU = (price per therm × 10) ÷ efficiency
A 95% furnace at $1.50 a therm: (1.50 × 10) ÷ 0.95 = $15.79.
Heat pump. One kWh is 3,412 BTU, so a million BTU needs 293 kWh of heat. The heat pump delivers COP units of heat per unit of electricity, so:
Cost per million BTU = (293 × price per kWh) ÷ COP
At 18.34¢ per kWh and a seasonal COP of 3: (293 × 0.1834) ÷ 3 = $17.91.
Those two numbers are remarkably close at national-average prices, which is exactly why this argument never settles. It is genuinely close, and it tips on local prices.
Where it lands at different electricity prices
Gas held at $1.50 per therm in a 95% furnace, which is $15.79 per million BTU. Only the electricity price changes.
| State | ¢ per kWh | Heat pump, COP 2.5 | COP 3.0 | COP 3.5 | vs gas at $15.79 |
|---|---|---|---|---|---|
| Washington | 14.91 | $17.47 | $14.56 | $12.48 | heat pump cheaper |
| Nevada | 13.11 | $15.36 | $12.80 | $10.97 | heat pump cheaper |
| Texas | 15.94 | $18.68 | $15.57 | $13.34 | heat pump cheaper |
| Georgia | 16.36 | $19.17 | $15.98 | $13.70 | gas cheaper |
| Ohio | 19.19 | $22.49 | $18.74 | $16.06 | gas cheaper |
| New York | 29.49 | $34.56 | $28.80 | $24.69 | gas cheaper |
| Massachusetts | 29.61 | $34.70 | $28.92 | $24.79 | gas cheaper |
| California | 34.74 | $40.72 | $33.93 | $29.08 | gas cheaper |
Two things fall out of that table. In cheap-electricity states the heat pump wins comfortably at any plausible COP. In the expensive Northeast and California it loses to gas on running cost alone at a COP of 3, and only catches up if the equipment is good enough to hold a higher seasonal average, or if gas is dearer than $1.50 where you live.
Both halves of that are worth checking against your own bills rather than assumed. Your gas price moves, sometimes a lot, and your electricity rate is on your bill rather than in a national average. The bill-reading guide shows how to find your real marginal rate, which is the number to put in the formula.
Being honest about COP
The single biggest source of bad advice here is quoting a heat pump's best-case efficiency and comparing it to a furnace's worst case.
A heat pump's COP is not one number. It is high in mild weather and falls as it gets colder, because there is less heat outside to move. Manufacturers publish ratings at fixed test conditions, and the seasonal figure you actually experience depends on your climate, the equipment, how well it was sized and installed, and where the controls hand over to backup heat.
Reasonable planning assumptions:
- Mild winter climate, heat pump rarely below 35°F: seasonal COP 3.0 to 3.8.
- Mixed climate with real cold snaps: seasonal COP 2.5 to 3.0 for a good cold-climate unit.
- Cold climate, sustained sub-freezing: seasonal COP 2.0 to 2.7, lower if auxiliary resistance heat runs often.
- Older or standard-efficiency unit anywhere: assume the low end of the range for your climate.
That last point matters more than the equipment brochure. Auxiliary resistance heat runs at a COP of 1. Every hour the backup strips engage costs about three times what the heat pump itself costs for the same heat. A system that engages backup heat frequently because it is undersized, or because the switchover temperature was set conservatively at install, can turn a winning comparison into a losing one. If your heat pump bills look wrong, how many hours the auxiliary heat ran is the first thing to check.
What the comparison leaves out
Running cost is one input to a decision that has several.
Cooling comes free with the heat pump. It is an air conditioner run backwards, so if you need air conditioning anyway, you are buying one machine instead of two. Comparing a heat pump's installed cost against a furnace alone overstates the gap.
Installed cost and rebates. A heat pump usually costs more up front than a like-for-like furnace replacement, but federal, provincial, state and utility incentives in many regions close much or all of that gap. These change often enough that it is worth checking current programmes rather than relying on a figure from a year ago.
Your house, not just the equipment. Insulation and air sealing reduce the heat you need regardless of how you make it, and they make a heat pump work better because the system spends more time in its efficient range. Money spent on the envelope is rarely wasted.
Fuel price risk. You are choosing exposure as well as cost. Gas and electricity prices move independently and not always in the same direction. A dual-fuel system hedges this by switching to whichever is cheaper on the day.
Standby electricity on a gas furnace is not zero. The blower that distributes the heat is electric and draws real power; our wattage chart lists it at 500 W. A gas furnace is not a gas-only appliance.
The dual-fuel switchover point
If you have both, the right switchover temperature is the outdoor temperature at which the two fuels cost the same per unit of heat. Above it the heat pump is cheaper; below it the furnace is.
You can calculate it roughly by finding the COP at which the heat pump's cost per million BTU equals the furnace's, then reading your equipment's performance data for the outdoor temperature where it achieves that COP. At 18.34¢ per kWh and gas at $1.50 a therm, break-even is a COP of about 3.4, which most cold-climate units hold down to somewhere in the 20s Fahrenheit.
Many installers set the switchover high, around 35 to 40°F, because it is conservative and avoids callbacks. That is comfortable but expensive. If you have a dual-fuel system and cheap electricity, it is worth asking for the setting and recalculating.
Doing it with your own numbers
- Find your marginal electricity rate on your bill, not the state average.
- Find your gas price per therm, including delivery charges that are billed per unit.
- Pick a realistic seasonal COP from the ranges above for your climate and equipment age.
- Run both formulas. If they land within a dollar or two of each other, running cost is not the deciding factor and you should choose on cooling, incentives and fuel-price risk instead.
For the electricity side of any specific appliance, including the furnace blower and any resistance backup, the calculator will price it at your rate. If you are weighing this against simply heating fewer rooms, the space heater cost page covers where zone heating does and does not save money.