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Heat Pumps: what homeowners should know

This information is designed to provide homeowners with clear, factual details about the use of electric heat pumps, so that you can make an informed decision based on your household’s needs. Through Sarnia Saves, removal of backup natural gas space heating (fireplaces excluded) is required but you do not need to disconnect your natural gas service.

Understanding Your Options

When choosing a heating system, consider:

• Fuel price ratio: the ratio of how much you pay for electricity versus natural gas per unit of energy
• Realized equipment efficiency: how effectively your system converts energy into heat
• Greenhouse gas (GHG) emissions: the environmental impact of your heating choices

Different households have different needs and priorities. There is no single “best” solution; what’s right for you depends on your preferences, budget, and home characteristics.

Furnaces and heat pumps

If you currently heat your home with natural gas and are looking to reduce some or all of your natural gas home heating with an electric heat pump, here’s what most consumers can expect:

1. Higher heating costs if the fuel price ratio exceeds your increased realized equipment efficiency - magnitude will depend on how much electricity vs natural gas is consumed for heating and the rates you pay for each. See illustrative cost comparison below.
2. Lower overall energy use and GHG emissions - as electric heat pumps use energy more efficiently than gas furnaces.

Comparing Heating Systems

This chart illustrates the potential monthly home energy costs of heating using an air source heat pump, a natural gas furnace, or electric resistance auxiliary heating based on approximate residential electricity prices from Bluewater Power and natural gas prices in the Union South rate zone.

The cost comparisons use rates as of January 1, 2026, including the Ontario Electricity Rebate (OER).

• The chart is an illustrative example only and not intended to represent energy cost impacts specific to your property.
• Fixed monthly charges for electricity and natural gas are not included in this comparison.
• See footnotes for details on how these figures were derived.

Electric Heat Pump System Settings

• An electric heat pump works in tandem with any electric resistance auxiliary heating. As such, an electric heat pump system’s settings – especially the outdoor “switchover temperature” setpoint – determines when heating will fully switch between the heat pump and any electric resistance auxiliary heating. Lower setpoints mean the heat pump runs longer; higher setpoints mean the electric resistance auxiliary heating runs longer. This is because when it’s warmer outside than the setpoint, the heat pump will run. When it’s colder outside than the setpoint, the electric resistance auxiliary heating will run.
• Your total energy bill will depend on these settings and local rates. Your total energy bill may go up where electricity is more expensive than natural gas (per equivalent unit of heating after accounting for your realized equipment efficiency), and vice versa.
• Determining the switchover temperature setpoint is an important decision and makes a difference.
• Heat pump economics are complex and vary with weather, equipment efficiency, user preferences and other factors which vary from home to home. Because these details are complex and unique to each installation, we recommend discussing options directly with your HVAC contractor.

Key Facts

• Natural gas and electricity have different costs per unit of energy. As of January 2026, electricity costs are more than 4.5 times higher per energy unit than natural gas, however heat pumps are more efficient than gas furnaces.
• Heat pumps can reduce overall energy use and GHG emissions compared to traditional furnaces, but may result in higher energy bills depending on rates, realized equipment efficiency and usage.
• Your choice should reflect your household needs, budget, and environmental priorities.

What Should You Do?

• Consult your HVAC contractor to determine if a heat pump is right for your home’s heating needs.
• Ask about system settings (especially switchover temperature) and how they affect your energy consumption, bills, and GHG emissions.
• Review current utility rates and rebates to understand your potential costs.

Footnotes

1. 3,100 kWh represents the approximate space heating energy requirement for a Sarnia home for the month of January. For reference, the average Ontario household space heating energy for the entire heating season is about 15,556 kWh, based on the Natural Resources Canada energy use data system (showing a total Ontario space heating requirement of 331.4 PJ for 5,808,500 households in 2022, or on average 57 GJ per household per year, which converts to 15,833 kWh per household at 277.78kWh/GJ). These heating requirements are for illustrative purposes only and will vary significantly depending on month, actual temperatures, equipment efficiency, and size, age and condition of the building.
   
   
2. The efficiency of heat pumps, which is expressed as a coefficient of performance (COP), typically ranges from 2-4 for air source heat pumps (Plumbing and HVAC Magazine, Edition: The Contractor’s Guide to Heat Pumps, page 7, April 2025). This translates to an effective efficiency of 200%-400%, meaning that for every unit of electricity used, the heat pump moves 2-4 units of heat into the home.
   
   The efficiency of natural gas furnaces is expressed as Annual Fuel Utilization Efficiency (AFUE). The average high efficiency natural gas furnace has an AFUE between 90% - 98.5% (https://www.energy.gov/energysaver/furnaces-and-boilers). This means that the furnace delivers 90-98.5% of the energy in the natural gas consumed into heat delivered to the home.
   
   
3. Effective April 1, 2025, the Federal Carbon Charge (FCC) under the Greenhouse Gas Pollution Pricing Act has been set to zero. This action has changed the price spread between natural gas and electricity significantly. As a result, this changes the economics of electric heat pump operation, particularly for natural gas customers who are looking to offset some or all of their space heating energy consumption with an electric heat pump.
   
   The fuel price spread in Ontario without the FCC and including the Ontario Electricity Rebate (OER) is more than 4.5 times as of January 1, 2026. This means that electricity energy costs are more than 4.5 times those of natural gas energy costs per unit of equivalent energy. This cost spread reflects variable energy pricing only (does not include fixed utility charges) and is based on the below published resources. Energy prices may differ depending on your location in the province, whether you are under the OEB’s regulated price plan for electricity, your natural gas rate class, and who your electricity and natural gas providers are.
   
   Electricity rates as of Jan 1, 2026 for Sarnia: Bluewater Power
   
   Natural Gas supply prices as of Jan 1, 2026, for EGI rate zone in Sarnia: Union Rate Zones (South, North East, North West)
   
   The Ontario Energy Board also publishes rate information on other utilities. See https://www.oeb.ca/consumer-information-and-protection/bill-calculator
   
   
4. To compare prices per unit of equivalent energy, measurements for natural gas consumption (m³) are converted into the same energy basis as electricity (kWh). See conversion factors published by the Canada Energy Regulator.