Natural gas edges out the heat pump on running cost in Arizona, but only just. The gap is small enough that other questions carry more weight: whether a gas line reaches the house, whether you need air conditioning anyway, and what is already sitting in the utility closet.
The short answer for Arizona
Start with the numbers. Using average Arizona residential prices, a natural gas furnace at 95% AFUE delivers a million Btu of heat for $18.86. A heat pump at 8.1 HSPF2 (a seasonal COP of about 2.4) delivers the same amount for $19.06. Electric resistance heat, the baseboard or electric-furnace kind, costs $45.25. Those figures are computed from EIA residential electricity and natural gas prices, ENERGY STAR efficiency levels, and EIA energy conversions.
So gas is the cheapest to run here, by $0.20 per million Btu. Nobody would pick a heating system over that margin, and a small shift in a utility’s rate plan could erase it.
Two limits on what these figures mean. They compare fuels on the same unit of delivered heat, so they are running costs for one identical house, not a yearly bill, which depends on square footage, insulation, thermostat habits and your rate plan. They also say nothing about equipment or installation cost, which is a separate question and often the bigger one.
The real gap in this comparison is the one between the heat pump and resistance heat, more than $26 per million Btu. Treat running cost as a tie between gas and a heat pump, and decide on gas service, cooling needs and the equipment you already own.
What each option costs to run in Arizona
| System | Efficiency used | Cost per million Btu delivered |
|---|---|---|
| Natural gas furnace | 95% AFUE | $18.86 |
| Heat pump | 8.1 HSPF2 (seasonal COP about 2.4) | $19.06 |
| Electric resistance (baseboard) | 100% efficient | $45.25 |
The electricity side of that table rests on a residential average of 15.44 cents per kWh, the year-to-date figure through July 2026 from the U.S. Energy Information Administration’s Electric Power Monthly (Table 5.6.B). It is a statewide average. Utilities and rate plans differ, so use it to compare fuels, not to predict your own bill. The gas side uses the EIA’s average residential natural gas price, converted at about 1,037 Btu per cubic foot. Your gas rate comes from your local utility, and it is worth looking at before you trust any comparison, mine included.
Efficiency matters as much as the fuel price because you are buying heat, not kilowatt-hours or cubic feet. Burning gas in a 95% AFUE furnace turns nearly all of the fuel’s energy into warm air. Electric baseboard also converts 100% of its electricity to heat, but electricity costs more per Btu, hence $45.25. A heat pump sidesteps that by moving heat from outdoor air into the house, so each kilowatt-hour brings in roughly 2.4 times its own energy as heat over a season.
That also means the heat pump’s side of the table moves with the rating on the nameplate. ENERGY STAR sets the minimum at 8.1 HSPF2 for ducted split systems and single-package units, and at 8.5 for non-ducted (ductless) split systems. The higher bar for ductless exists because it has no duct losses to give back, so it starts with a built-in advantage and has to do better to earn the same label. For more on what that rating counts, see What HSPF2 Measures, and Why Ductless Asks for More. A unit rated above the minimum would shave the heat pump figure below $19.06, but the table uses the floor because that is the number ENERGY STAR publishes. Ask for the HSPF2 number on every quote, and compare it only against another HSPF2.
How cold it gets, and what that does to a heat pump
Heating degree days turn a climate into a fuel bill. For every day of the year, they add up how far the average temperature sat below 65°F. At Phoenix Sky Harbor, the reference station, NOAA’s 1991-2020 normals show about 874 heating degree days a year. Many northern states run into the thousands, so winter here is short and mild instead of long and punishing.
The coldest month tells the same story. Its mean daily minimum at that station is 45.3°F. That is the average overnight low in the coldest stretch of the year, not a record, and it stays well above freezing. A heat pump loses efficiency as outdoor air gets colder, and the 2.4 seasonal COP in the table is an average across a whole heating season. In deep cold the real number drops, and a backup (electric strips or a furnace) carries the coldest nights. In the Phoenix area, the heat pump barely leaves its efficient range, so the seasonal figure is a fair picture of what it delivers rather than an optimistic one.
One caution: this is a single station. Arizona’s high country can run far colder than the desert floor. If that describes your address, the heat pump’s efficiency and the need for backup heat deserve a closer look, which How Cold Is Too Cold for a Heat Pump walks through.
Cooling puts the climate in sharper perspective. The same station logs about 4,765 cooling degree days a year, more than five times the heating total. The system in your house will spend far more hours fighting summer than winter, and that shapes the whole decision. In the Phoenix area, trust the heat pump’s seasonal efficiency figure; in colder high-country homes, plan for a backup heat source.
What homes in Arizona already heat with
The Energy Information Administration’s 2020 Residential Energy Consumption Survey gives a state-level picture. By main equipment, 55% of Arizona homes use a furnace and 25% a central heat pump. For a steam or hot-water boiler, the survey does not publish a figure, because the estimate was suppressed as unreliable. That is different from zero, and it would be wrong to say no Arizona home has one.
By main fuel, electricity leads at 51%, natural gas follows at 36%, and propane sits at 2%. Fuel oil or kerosene is not reported for the same suppression reason. The furnace and gas shares do not match (55% against 36%), which suggests that a share of Arizona furnaces run on something other than gas, probably electricity. A furnace here is not automatically a gas furnace. These are statewide numbers from a national survey, not a count for your neighborhood.
What they mean for the choice is practical. If your house has no gas line, the comparison is no longer gas versus heat pump. It becomes heat pump versus resistance heat, $19.06 against $45.25 per million Btu, and the heat pump wins by a wide margin. If your house heats with a boiler and radiators, there are no ducts to reuse, so any conversion is a different project, and a ductless setup may be the cleaner path. Ductless or Central covers that trade-off, and Heating a Home in Arizona fills in the wider picture for the state.
When the other choice wins
Gas has the lowest running cost on paper, and there are still good reasons to skip it. The first is the simplest: no gas service. Running a new line to a house, or switching to propane, is its own expense and its own monthly arrangement, and none of the computed figures apply to it. Where gas is not already there, the heat pump is the practical pick.
The second is cooling. Most Arizona households need air conditioning far more than heat. A heat pump is an air conditioner that can also run in reverse, so one outdoor unit handles both seasons. A gas furnace still needs a separate air conditioner, which means two systems to buy, maintain and replace. When a cooling system is due anyway, that tilts things toward a heat pump even though gas is twenty cents cheaper per million Btu.
A dual-fuel setup, a heat pump paired with a furnace for the coldest hours, makes more sense where winters bite harder, such as the higher-elevation parts of the state. In the desert reference city, with a coldest-month low of 45.3°F, backup heat has little to do.
Then there is the old furnace that still works. Replacing equipment that has years left, just to save or spend a few cents per million Btu, rarely pays. Repair costs, the unit’s age and its efficiency are the better guide, and Repairing a Furnace or Replacing It sets out how to weigh them. Keep a working gas furnace until repairs stop making sense, and pick a heat pump when a new cooling system is due or gas is not available.
Common questions
Is a heat pump cheaper to run than electric baseboard in Arizona?
Yes, by a wide margin. At average residential prices, a heat pump at 8.1 HSPF2 costs $19.06 per million Btu delivered, against $45.25 for electric resistance heat. That figure is computed from EIA prices and ENERGY STAR efficiency levels.
Does a heat pump work during Arizona winters?
At the Phoenix reference station, the coldest month averages a daily low of 45.3°F, so winter stays mild for a heat pump. Higher-elevation parts of the state can be much colder, and a backup heat source matters more there.
What is the difference between HSPF2 and SEER2?
HSPF2 rates heating and SEER2 rates cooling, so compare two units on the same letter. ENERGY STAR asks for at least 8.1 HSPF2 and 15.2 SEER2 from ducted split systems and single-package units, and 8.5 HSPF2 and 15.2 SEER2 from non-ducted split systems. Those are minimums to earn the label, not typical values.
Do these figures tell me what my heating bill will be?
No. They compare fuels on one million Btu of delivered heat at statewide average prices. Ask your gas and electric providers for their current residential rates before comparing.