Natural gas typically costs less per unit of heat than electricity, but the cheaper option for a home depends on appliance efficiency, local utility rates, and fixed monthly charges. For a fair comparison, buyers should compare the cost of delivering the same amount of heat—not just the price per therm and per kilowatt-hour.
| Item | Low | Average | High | Notes |
|---|---|---|---|---|
| Residential natural gas | $1.00/therm | $1.60/therm | $2.50/therm | Delivered price; taxes and fixed charges vary |
| Residential electricity | $0.10/kWh | $0.16/kWh | $0.30/kWh | Higher in some coastal and island markets |
| Gas furnace heat | $0.04/kWh-heat | $0.06/kWh-heat | $0.10/kWh-heat | Assumes 80%-96% furnace efficiency |
| Electric resistance heat | $0.10/kWh-heat | $0.16/kWh-heat | $0.30/kWh-heat | Nearly one kWh of electricity per kWh of heat |
Natural gas and electricity prices per unit of heat
Residential gas is commonly billed by therm, while electricity is billed by kilowatt-hour (kWh). One therm contains about 29.3 kWh of energy, but a furnace loses some heat through exhaust and ductwork. An 80%-efficient furnace uses roughly 0.043 therm to provide one kWh of usable heat; a 96% model uses about 0.036 therm.
At typical rates, gas furnace heat often costs less than electric resistance heat, but local rates can reverse the comparison. For example, $1.60 per therm and a 90% furnace efficiency equate to about 6.1 cents per kWh of delivered heat, before fixed monthly fees. At 16 cents per kWh, resistance heat costs about 16 cents per kWh of heat.
Assumptions: U.S. residential utility rates, standard furnace operation, no unusual delivery or fuel surcharges.
What a 1,000-square-foot home might pay to heat
Home size alone does not determine heating bills. Climate, insulation, thermostat settings, equipment condition, and heating hours matter. The comparison below uses 30 million Btu of seasonal heat delivered to the rooms, a reasonable illustration rather than a forecast for every 1,000-square-foot home.
| Heating setup | Low | Average | High | Basis |
|---|---|---|---|---|
| Gas furnace | $1,070 | $1,600 | $2,230 | $1.00-$2.50/therm; 90% efficiency |
| Electric resistance | $880 | $1,410 | $2,640 | $0.10-$0.30/kWh; 100% at point of use |
| Heat pump | $290 | $560 | $1,320 | Seasonal COP 2-3; electricity rate varies |
A heat pump can use substantially less electricity than resistance heat because it moves heat rather than generating it directly. The estimate excludes customer charges, equipment financing, and cooling use. Cold-weather performance and backup resistance heat can raise a heat pump bill.
How utility charges change the bill comparison
Energy rates are only part of a monthly bill. Gas accounts may include a customer charge of roughly $8-$30 per month, plus delivery, taxes, and seasonal adjustments. Electricity accounts commonly have fixed charges around $10-$35 per month, alongside generation and transmission rates. Actual charges depend on the utility and rate plan.
Fixed charges matter most when a home uses little of one fuel. A gas furnace may appear economical per unit of heat, but keeping a gas account open just for a stove or water heater can add $100-$360 annually in customer charges. Check the bill’s supply and delivery line items rather than relying on a headline fuel price.
| Quote component | Typical range | How it affects comparison |
|---|---|---|
| Gas customer charge | $8-$30/month | Applies even in low-use months |
| Electric fixed charge | $10-$35/month | May vary by rate plan |
| Gas delivery and supply | $1.00-$2.50/therm | Combined delivered price varies by utility |
| Electric energy and delivery | $0.10-$0.30/kWh | Time-of-use plans can change the effective rate |
Furnace efficiency and heat pump performance shift the result
Gas furnace efficiency is commonly about 80%-96% AFUE. Replacing an older 80% furnace with a 96% model reduces fuel needed for the same heat by roughly 17%, but does not guarantee lower total costs if installation expenses or gas rates are high. Furnace replacement commonly runs about $3,500-$8,000, depending on capacity, venting, and site work.
Heat pumps generally beat resistance heating on energy use, while gas furnaces can remain cheaper where gas is inexpensive. A heat pump with a seasonal coefficient of performance (COP) of 2.5 delivers about 2.5 units of heat per unit of electricity. Its heat cost is electricity price divided by COP; at 16 cents per kWh, that is about 6.4 cents per kWh of heat.
Why regional gas and electric bills differ
Local prices can diverge sharply. Areas with abundant pipeline gas may have lower gas supply costs, while places dependent on imported fuel or constrained pipelines can see higher winter bills. Electricity prices may rise with generation costs, transmission needs, or high demand. As a broad planning range, an urban household’s delivered energy rate may be 10%-30% above a nearby lower-cost rural market, though the direction is not consistent everywhere.
Compare the rates on the actual local bills, not a national average. A homeowner should use the utility’s current cents-per-kWh and dollars-per-therm figures, include monthly account charges, and check whether the quoted gas amount includes delivery and taxes.
When an electric heat pump costs less than gas
For equal delivered heat, compare gas cost per therm divided by furnace efficiency with electricity cost per kWh divided by heat pump COP, adjusting units so both figures represent the same heat output. A quick household estimate can use seasonal consumption: therms used for heating multiplied by the delivered gas rate, versus kWh used by an electric system multiplied by its rate.
At 16 cents per kWh, a heat pump with a COP above about 2.6 can undercut a 90%-efficient gas furnace at $1.60 per therm. This break-even point changes with rates and actual seasonal performance. In cold climates, verify the unit’s low-temperature capacity and expected backup heat use.
How to lower heating costs without switching fuels
Reducing heat loss can improve either system’s economics. Sealing air leaks and adding attic insulation may cost about $500-$3,000 for targeted work, while broader insulation projects can exceed that range. A programmable thermostat, maintained filters, and correctly sized equipment can help reduce usage without changing the utility connection.
Start by comparing total annual cost before paying for a fuel conversion. Get at least two installed-system quotes, request estimated annual energy use, and ask whether the estimate includes duct modifications, electrical-panel upgrades, venting, permits, and disposal. A lower equipment price may not mean a lower project total.
Questions about gas and electricity pricing
Which fuel is cheaper for cooking? The difference is usually modest because cooking uses much less energy than space heating. Appliance efficiency, fixed account fees, and existing connections can outweigh the per-unit rate.
Can the comparison change during winter? Yes. Gas supply charges and electricity time-of-use rates can vary by season or hour, and cold weather can reduce heat pump efficiency. Review monthly bills and rate-plan details for a realistic annual comparison.