Energy-efficient heating and cooling on us

Multi-unit residential buildings, including retirement homes and homes less than six months old are eligible for electric heat pump rebates. Participants do not need to disconnect their natural gas service, but must be a first-time installer of an eligible electric heat pump system.

Effective April 1, 2025, the Federal Carbon Charge (FCC) under the Greenhouse Gas Pollution Pricing Act has been set to zero. This change has significantly altered the cost spread between natural gas and electricity.* As a result, the economics of operating an electric heat pump have shifted, particularly for natural gas customers who are considering offsetting some or all of their space heating energy consumption with an electric heat pump.

Natural gas customers who have installed, or are planning to install, an electric heat pump for space heating may see an increase in their home's total energy bills.^† Homeowners should work with their HVAC contractor to ensure that their equipment and controls are installed and configured to meet their specific space heating goals.

* As of May 1, 2025, the fuel price spread in Ontario—without the FCC and including the Ontario Electricity Rebate (OER)—is approximately 4:1. This means that electricity costs are about four times higher than natural gas costs per unit of equivalent energy. In the Sarnia area, the ratio is approximately 2.6:1. These figures reflect energy pricing only and are based on the following published resources:

• Electricity rates as of May 1, 2025 for the Sarnia area, as recorded by Bluewater Power.
• Natural gas supply prices as of July 1, 2025 for the Sarnia area, as recorded by Union South Rate Zone.

To compare costs per unit of equivalent energy, natural gas consumption (measured in m³) is converted to the same energy basis as electricity (kWh), using the conversion factors published by the Canada Energy Regulator.

^† The consumer economics of switching from natural gas to electricity depend largely on: the fuel price spread, the efficiency of the heat pump and the difference in purchase and installation costs between a heat pump and a conventional gas heating system. For the Sarnia Saves pilot program, the full cost of the heat pump is covered; however, the difference in operating costs due to the fuel price spread must still be considered.

The efficiency of heat pumps is expressed as a coefficient of performance (COP), which typically ranges from 2 to 4 for air-source heat pumps (Plumbing and HVAC Magazine, The Contractor's Guide to Heat Pumps, April 2025, p. 7). This equates 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). High-efficiency natural gas furnaces generally have an AFUE between 90% and 98.5%, meaning they convert 90%-98.5% of the energy in the natural gas into heat for the home.

To illustrate the potential residential energy costs of producing the equivalent heat content using an air-source heat pump versus a natural gas furnace, please refer to the chart below. This chart is based on approximate residential electricity prices from Bluewater Power (weighted average: $0.09807 /kWh) and natural gas prices from the Union South rate zone for Sarnia ($0.256/m³, equivalent to ~$0.0247 /kWh). It has been provided for illustrative purposes only and is 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.