Ontario's Plain-English Guide to Custom Home Buildingπ 705-533-1633 | βοΈ 1-866-868-6606 | βοΈ info@icfhome.ca
Natural Gas vs Heat Pump Operating Cost in Ontario: The Arithmetic, With Your Own Rates
Heating and efficiency Costs From a builder
Natural Gas vs Heat Pump Operating Cost in Ontario: The Arithmetic, With Your Own Rates
Every winter somebody tells me gas is cheaper, and somebody else tells me the heat pump is. They are both right, in different houses, in different months, at different rates. Here is how to do the arithmetic for yours instead of taking either of our words for it.
Short version: Cost per unit of delivered heat is the comparison. Gas: price per cubic metre including delivery and carbon charges, divided by the energy in a cubic metre and the furnace efficiency. Heat pump: price per kilowatt-hour including delivery, divided by the seasonal coefficient of performance. In a tight house with a cold-climate heat pump running at a seasonal COP around 2.5, the two are close at recent Ontario rates; the heat pump wins in mild weather and loses on the coldest days. In a leaky house gas wins because the heat pump spends the winter on backup. Rates change; the method does not.
The only fair comparison: cost per delivered unit of heat
A gas bill and a hydro bill are not comparable until you turn both into dollars per unit of heat that actually reaches the rooms. Use gigajoules or kilowatt-hours, whichever you like; the method is the same.
Gas. One cubic metre of natural gas holds about 37.5 megajoules, or roughly 10.4 kWh, of energy. A condensing furnace delivers about 95 percent of it; a mid-efficiency unit about 80. Take your all-in gas price per cubic metre (commodity plus delivery, transportation, carbon charge and HST, from your bill), divide by 10.4, divide by the efficiency, and you have dollars per delivered kWh.
Heat pump. Take your all-in electricity price per kWh (energy plus delivery, regulatory and HST, from your bill; time-of-use averages are fine for this), and divide by the seasonal coefficient of performance, which for a cold-climate heat pump in southern Ontario runs around 2.2 to 3 depending on the unit and the house. That is dollars per delivered kWh.
Compare the two numbers. Whichever is lower is cheaper to run, for that house, at those rates, that winter.
A worked example with round numbers
Use your own bill; these are illustrative only. Suppose gas all-in is 0.45 dollars per cubic metre and the furnace is 95 percent efficient: 0.45 divided by 10.4 divided by 0.95 gives about 4.6 cents per delivered kWh. Suppose electricity all-in is 15 cents per kWh and the seasonal COP is 2.5: 15 divided by 2.5 gives 6 cents per delivered kWh. At those rates gas is cheaper on average, by about a third.
Now change one input. A seasonal COP of 3.2, which a good unit in a tight house with mild shoulder seasons can reach, gives 4.7 cents, a dead heat. Drop the gas price or raise the carbon charge and the line moves again. The point is not the answer; it is that you can get the answer in five minutes from two bills, and you should, every couple of years.
| Input | Where to find it | Moves the answer toward |
|---|---|---|
| All-in gas price per cubic metre | Your gas bill, total divided by cubic metres | Higher price favours the heat pump |
| Furnace efficiency (AFUE) | The furnace label; 95 percent for condensing | Older furnace favours the heat pump |
| All-in electricity price per kWh | Your hydro bill, total divided by kWh | Higher price favours gas |
| Seasonal COP of the heat pump | Installer’s estimate from the unit rating and your climate | Tighter house and milder climate favour the heat pump |
| Hours below the balance point | The heat loss design | More cold hours favour gas or dual fuel |
Why the envelope decides it
The seasonal COP is not a property of the heat pump alone; it is the heat pump working in your house. A tight, well-insulated house has a small heat loss, so the unit runs at low speed most of the time, where inverters are most efficient, and rarely needs backup. A leaky house forces the unit to full speed and into backup on every cold night, and the backup is electric resistance at COP 1, which drags the season average down and the bill up. SB-12 is the minimum envelope; the ICF energy savings calculator shows what going past it does to the heat loss, and therefore to this comparison.
Dual fuel: let the controls do the arithmetic
A heat pump with a gas furnace as backup can be set to switch over at the outdoor temperature where gas becomes cheaper, which the installer calculates from the same inputs above. That is the economic balance point, and it is usually somewhere between minus 5 and minus 15 at recent rates. Above it the heat pump runs; below it the furnace does. The house gets the cheaper fuel every hour, and the owner gets to stop arguing with the neighbours. Cold-climate heat pumps covers the equipment side.
What the comparison leaves out
- Equipment and installation cost, which differ and which rebates change; the geothermal and radiant cost pages carry the ranges
- Cooling, which the heat pump provides and the furnace does not
- The gas connection fee and the monthly customer charge, which you pay whether you burn gas or not; a house with no gas at all saves both
- Future rates and carbon pricing, which nobody on this page can predict
- Rural lots with no gas line, where the comparison is heat pump against propane or oil, and the heat pump wins by a wide margin
Related guides on this site
Sources and further reading
Questions people ask
Is a heat pump cheaper than natural gas to run in Ontario?
It depends on your rates, the furnace efficiency, the heat pump's seasonal COP and how tight the house is. At recent rates the two are close in a well-insulated house, with gas usually ahead on the coldest days and the heat pump ahead in mild weather. Do the arithmetic with your own bills.
How do I compare gas and electricity heating costs?
Convert both to cost per delivered kWh of heat: gas price per cubic metre divided by 10.4 and by the furnace efficiency; electricity price per kWh divided by the heat pump's seasonal COP. The lower number is the cheaper fuel.
What is a good seasonal COP for a heat pump in Ontario?
Around 2.2 to 3 for a cold-climate air-source unit in southern Ontario, higher in a tight house with mild shoulder seasons and lower in a leaky house that runs backup heat.
What is dual fuel heating?
A heat pump with a gas furnace as backup, switching to gas below the outdoor temperature where gas becomes cheaper. The controls pick the cheaper fuel each hour.
Size it from a heat loss, not a guess
Every heating choice starts with the heat loss of your actual house. OntarioHeatLoss.ca produces the CSA F280 calculation and the mechanical design your permit needs, anywhere in Ontario.
Reviewed and updated October 2026. Costs are Ontario ranges, not quotes; code references are to the Ontario Building Code in force at that date.
