# How to estimate and compare operating costs of gas vs electric furnace?

My home has an old electric, central furnace. All of my neighbors are on natural gas. I pay 5-6 times as much as they do on my heating bills during winter months.

I can either convert my home to natural gas or install an electric heat pump. Air conditioning is not at all important where I live, so considered an insignificant part of the math.

Current rates are:

• \$0.34 per therm, for natural gas
• \$0.14 per kilowatt hour for electricity

As my electric bills are so high, I need to buy the most efficient equipment possible. Upfront costs will be \$8-10k regardless of whether I put in a gas or electric furnace.

Based on current rates, what equipment specs and math are needed to estimate the monthly cost of a natural gas furnace vs an electric heat pump?

Update:

Climate average lows in winter: Oct: 29°F Nov: 18°F Dec: 11°F Jan: 11°F Feb: 16°F Mar: 20°F Apr: 24°F May: 33°F

I learned my state offers mail in rebates of \$200-375 for installing gas furnaces and a \$2000 tax credit for electric heat pumps. Is that indicative of lower costs?

• Knowing the insulation of the house is important also, wondering if your neighbours have good insulation and you don't. Jun 24, 2022 at 15:20
• @crip659 I am also working on adding insulation, replacing windows with more efficient ones, etc. Jun 24, 2022 at 15:23
• The new upgrades of insulation/windows will probably do more to lessen your cost of heating, than the type of heating system you buy. Check with locals for any rebates for upgrades. Jun 24, 2022 at 16:11
• It sounds like you're looking for a TCO (total cost of ownership) calculation - those are notoriously complicated. You can get closer to an operational cost by converting your "therm" and "kWh" to BTU or another unit of heat energy, these are directly comparable and depend on the efficiency and capabilities of the equipment. Jun 24, 2022 at 16:13
• Are you in the U.S.? Which state? Many states offer rebates for different types of equipment which will affect the answers. Your climate also makes a much bigger impact on the cost to operate a heat pump than a natural gas furnace. Jun 24, 2022 at 17:09