Heat Pump or Gas Furnace: How to Work Out Which Costs Less to Run

The Question Behind the Question

If you are researching Heat Pump or Gas Furnace: How to Work Out Which Costs Less to Run in Your Home, you have probably found plenty of confident answers and noticed that they contradict each other. Some sources say a heat pump will halve your heating bill. Others say gas is still cheaper in British Columbia. Both are quoting real numbers, and both are describing somebody else's house.

The honest position is that the answer depends on four things specific to your home, and once you know them the arithmetic is not difficult. This guide walks through the method rather than handing you a figure, because a figure quoted today ages badly. Energy rates are reviewed regularly, and a post claiming a fixed monthly saving will be wrong within a year.

What follows will let you work it out from your own bills. Our team at Northwind Heating, Cooling & Fireplace Showroom does this calculation with homeowners regularly, and it is worth understanding before anyone quotes you equipment.

Why the Comparison Is Not Straightforward

You cannot compare a gas furnace and a heat pump by looking at efficiency percentages, because the two are not measured on the same scale.

A furnace converts, a heat pump moves

A gas furnace burns fuel and turns it into heat. A high-efficiency condensing furnace might convert around 96% of the energy in the gas into usable heat. It cannot exceed 100%, because you cannot get more heat out than the fuel contained.

A heat pump does something different. It does not create heat, it moves existing heat from outside air into your home. Because it is moving energy rather than converting it, it can deliver several units of heat for each unit of electricity it consumes. That ratio is its coefficient of performance, and it is why heat pump efficiency figures can exceed 100% without breaking any laws of physics.

The ratio changes with the weather

The important caveat is that a heat pump's efficiency is not fixed. The colder it gets outside, the less heat there is available to move, and the harder the unit works to move it. Performance is strongest in mild conditions and declines as temperatures drop.

This is where the Lower Mainland becomes genuinely relevant rather than incidental. Our winters are mild and wet rather than deeply cold. A heat pump here spends the overwhelming majority of the heating season operating in the temperature band where it performs well, which is not true of a home in the interior or the prairies. Advice written for a colder climate does not transfer.

Two different fuels at two different prices

The final variable is what you pay for gas and electricity, which are priced in entirely different units. Gas is billed by the gigajoule, electricity by the kilowatt-hour, and BC Hydro's residential structure has a stepped element that means your marginal rate is not necessarily your average rate.

This is precisely why we are not printing numbers here. Both utilities revise rates, and the useful figures are the ones on your own bill.

How to Work It Out From Your Own Bills

You need four things. Two come from your utility bills, one from equipment specifications, and one from your own preferences.

1. What you currently spend on heating

Take your gas bills for the heating season, roughly October through April. Subtract your typical summer monthly gas cost multiplied by the number of months, since summer gas is your hot water and cooking rather than heating. What remains is your actual annual heating spend.

This one step matters more than any other, because most homeowners substantially over- or under-estimate it from memory.

2. Your actual energy rates

Take the total cost of your gas bill and divide by the gigajoules consumed, which gives your genuine all-in rate including delivery and fixed charges rather than the commodity rate alone. Do the same with a hydro bill: total cost divided by kilowatt-hours used.

Using all-in rates rather than headline commodity rates is what separates a realistic comparison from an optimistic one.

3. The efficiency of both systems

Your furnace's efficiency is on its rating plate, expressed as AFUE. For the heat pump, you want the seasonal performance figure for the specific model being proposed, not a generic industry average, and ideally a figure relevant to our climate rather than a national one.

4. Whether you want cooling

This is the factor most comparisons leave out, and it frequently decides the question. A heat pump provides cooling in summer from the same equipment. If you were otherwise going to install air conditioning, the comparison is no longer furnace versus heat pump. It is furnace plus air conditioner versus heat pump alone, which changes the capital cost side considerably.

Given how Lower Mainland summers have trended, this is worth thinking about honestly rather than dismissing. Our air conditioning and heat pump pages cover both routes.

What the Answer Usually Depends On

Working through the method with homeowners, the outcome tends to hinge on a few recurring factors.

• Whether you want cooling. If yes, the heat pump case strengthens substantially, because one system does both jobs.

• What you currently heat with. Homes on electric baseboards see the clearest running-cost improvement, because they are replacing direct electric resistance heat with heat that is moved rather than generated.

• Your home's envelope. Insulation, windows and air sealing affect a heat pump's economics more than a furnace's, because a heat pump delivers heat at a lower temperature over longer run times.

• Rebate eligibility. This changes the capital cost rather than the running cost, but it can be decisive. Our guide to BC heat pump rebates covers which programmes apply to which households.

• The age of your existing furnace. If it has years left, the comparison is different from one where you are replacing it regardless.

The Third Option Most People Don't Consider

The debate is usually framed as a choice, and it does not have to be. A dual-fuel or hybrid setup pairs a heat pump with a gas furnace and switches between them based on outdoor temperature and relative running cost.

The heat pump handles the mild conditions that make up most of a Lower Mainland heating season, operating where it is most efficient. The furnace takes over during genuine cold snaps. You keep both, and the system chooses.

It costs more up front than either option alone, so it is not automatically the right answer. But for a home with a relatively new furnace that wants cooling and better shoulder-season efficiency without discarding working equipment, it is often the sensible route and it rarely gets mentioned.

What About Homes Without Ductwork?

If you are on electric baseboards or hot water heating, there is no ductwork to reuse, and the comparison changes shape. Installing ducts in a finished home is disruptive and expensive.

The practical route is usually a ductless system, with an outdoor unit and one or more indoor heads serving the areas that matter. It gives you zone-by-zone control, which suits homes where some rooms are used far more than others. Our ductless mini split page covers how these are configured.

The same reasoning applies to hot water, where the choice between a conventional tank and a heat pump model turns on similar questions. Our guide to heat pump water heaters in BC homes covers what decides it.

Frequently Asked Questions

Is a heat pump cheaper to run than a gas furnace in BC?

It depends on your energy rates, what you currently heat with, your home's insulation and whether you also want cooling. Homes replacing electric baseboard heating see the clearest running-cost improvement. For homes on natural gas the comparison is closer and turns on your actual all-in gas and electricity rates, which is why working it out from your own bills gives a far more reliable answer than any general figure.

Do heat pumps work in Lower Mainland winters?

Yes, and our climate suits them particularly well. Heat pumps lose efficiency as outdoor temperatures fall, but Lower Mainland winters are mild and wet rather than severely cold, so a heat pump here spends most of the heating season in the temperature range where it performs strongly. Advice written for colder parts of Canada does not transfer directly.

Can I keep my gas furnace and add a heat pump?

Yes. That is a dual-fuel or hybrid system, where the heat pump handles milder conditions and the furnace takes over in genuine cold. It costs more initially than either system on its own, but it can make good sense if your furnace is relatively new, you want cooling, and you would like better efficiency through the long shoulder seasons.

How do I work out my real heating cost?

Add up your gas bills across the heating season, then subtract your typical summer monthly gas cost multiplied by the number of heating months, since summer gas covers hot water and cooking rather than space heating. For your rate, divide a bill's total cost by the units consumed, which gives an all-in figure including delivery and fixed charges rather than the commodity rate alone.

Does a heat pump replace my air conditioner too?

Yes. A heat pump provides both heating and cooling from the same outdoor unit, which is why the comparison changes when cooling is on your list. If you were planning to add air conditioning anyway, you are comparing a furnace plus an air conditioner against a heat pump on its own.

What if my home has no ductwork?

A ductless mini split system is usually the practical answer, with an outdoor unit and one or more indoor heads. Adding ductwork to a finished home is disruptive and costly, whereas ductless installation is far less invasive and gives you independent control of each zone, which suits homes where usage varies significantly room to room.

Getting a Real Number for Your Home

The method above will get you a reasonable estimate on your own. What it cannot account for is your home's actual heat loss, the condition and capacity of any existing ductwork, where equipment can physically go, and which rebate programmes you fall inside.

Those factors are what turn an estimate into a number you can plan around, and they need someone to look at the house. Northwind Heating, Cooling & Fireplace Showroom has been installing both heating systems and heat pumps across Surrey, Langley, Delta, White Rock and the wider Lower Mainland since 1989, and we are a registered contractor with CleanBC.

Get in touch and we will work through the comparison with you properly, including telling you when your existing system is the better thing to keep.