Heat Pump vs Gas Furnace in Ontario: How to Compare Costs

There is no single Ontario electricity-to-gas price ratio that tells every household which system costs less to run. The result depends on the home’s heat demand, the heat pump’s seasonal performance, the furnace efficiency, the prices and bill components that actually change, and how much backup heat is used. A sound comparison starts with one home and a clear boundary for the work being priced.

Start with the same useful heat

Use a recent year of bills to estimate space-heating energy, separating it from hot water, cooking, and other uses where possible. If the gas meter serves several appliances, do not treat the whole gas bill as furnace fuel. Likewise, a future heat-pump electricity estimate must include its seasonal heating use and any resistance backup, while separating cooling or other new electric loads if the comparison is for heating only.

For a simplified annual comparison, let (H) be the heat delivered to rooms in kWh. The furnace’s approximate fuel input is (H / eta_g), where (eta_g) is its seasonal efficiency as a fraction. The heat pump’s approximate electricity use is (H / SPF), where (SPF) represents seasonal heat delivered per unit of electricity over the relevant operating conditions. These are planning quantities, not substitutes for a load calculation or a design matched to the house. A single brochure COP at one outdoor temperature is not seasonal performance.

Multiply the estimated gas input by the applicable gas commodity or supply price, and the heat-pump electricity by the electricity price that applies in the hours it will use. For gas, check the current utility and rate zone; Ontario supply prices can vary by utility and change over time. For electricity, check the household’s plan and eligibility. Ontario’s current plan choices include different time-based or tiered structures, and a heat pump may shift usage into different hours or seasons. The Ontario Energy Board’s current pages describe plan inputs and regulated rates; they are not a quote for a particular combined bill.

Compare the bill changes, not just the energy line

Separate variable charges from fixed charges. If the household keeps gas for a water heater, fireplace, or cooking, a connection charge may remain after the furnace is removed. If it disconnects gas entirely, some charges may disappear, subject to utility rules and the actual account. Do not credit a heat pump with eliminating a full gas bill when another appliance still needs service. Also consider electricity delivery, riders, taxes, rebates, and bill credits according to how the household bill is actually calculated; a posted energy price alone is not the bill total.

Write the comparison in two columns: annual variable fuel cost, recurring charges that change, maintenance assumptions, and any new or avoided equipment cost. Keep costs that do not change outside the savings total. Use the same weather or heating-demand assumption for both choices. If the comparison includes cooling, domestic hot water, or building-envelope work, include the same service on both sides or show it separately.

Model backup and uncertainty

A dual-fuel installation can use the heat pump above a selected outdoor temperature and the furnace below it. That control point should reflect the equipment, local fuel prices, temperature-dependent performance, and the home’s comfort needs. It is not automatically the lowest-cost setting, and program eligibility settings are not necessarily an economic optimum. Ask the installer what outdoor temperature and balance-point assumptions are used, and request the expected annual share of heat supplied by each system. Keep that estimate separate from a rebate rule.

Build low, central, and high cases for seasonal performance, heat demand, future energy prices, and backup share rather than choosing one result that looks precise. A mild winter, a cold winter, altered thermostat settings, or a different utility plan can change the ranking. A design that is too small or poorly matched to the distribution system can also increase supplemental heat use. Natural Resources Canada recommends proper system sizing and design; the household comparison cannot compensate for an unsuitable installation.

For an Ontario decision, collect the last twelve months of electricity and gas bills, identify the gas utility and rate zone, confirm the electricity plan, and ask for a heat-loss-based design and seasonal-use estimate. Then compare the costs that really change. For a capital-cost and payback framework, see the calculator assumptions guide; for other fuels and useful-heat normalization, see the cross-fuel comparison.