In New Jersey, a gas furnace costs less to run than a heat pump. At average residential prices it delivers a million Btu of heat for $14.13, against $29.60 for a heat pump at the ENERGY STAR minimum. That gap holds for the same house, and it says nothing about installation cost. Three things can change the answer: whether the house has a gas line, how much cooling it needs, and how cold the coldest nights get.
The short answer for New Jersey
Gas wins on running cost because a unit of heat from natural gas is cheaper than a unit from electricity, even after a heat pump multiplies its electricity input. The furnace in this comparison is rated at 97% AFUE, so nearly all the gas becomes heat in the house. The heat pump is rated at 8.1 HSPF2, which works out to a seasonal COP of about 2.4. That means roughly 2.4 units of heat for every unit of electricity it draws over a winter.
The figures come from a calculation built on U.S. Energy Information Administration (EIA) average residential prices for electricity and natural gas, ENERGY STAR efficiency levels, and EIA energy conversions. On that basis the gas furnace costs $14.13 per million Btu delivered and the heat pump costs $29.60. Where a gas line already serves the house, the furnace is the cheaper system to run, by $15.47 per million Btu.
Read that as a comparison of fuels on the same unit. It is not a yearly bill, which depends on the size of the house, its insulation and how warm you keep it.
Electric resistance heat, such as baseboard, comes in at $70.28 per million Btu. Against that, a heat pump cuts the cost of electric heat by a wide margin. So the heat pump is the cheap choice among all-electric options and the gas furnace is the cheap choice overall. For the wider picture of fuels, equipment and seasons across the state, see Heating a Home in New Jersey.
What each option costs to run in New Jersey
| System | Efficiency used | Cost per million Btu delivered |
|---|---|---|
| Electric resistance (baseboard) | 100% | $70.28 |
| Heat pump | 8.1 HSPF2 (seasonal COP about 2.4) | $29.60 |
| Natural gas furnace | 97% AFUE | $14.13 |
Electricity in these numbers is priced at 23.98 cents per kWh, the average residential price for the year to date through July, from the EIA’s Electric Power Monthly, Table 5.6.B. The gas figure uses the EIA’s average residential natural gas price, converted at about 1,037 Btu per cubic foot, with electricity converted at 3,412 Btu per kWh. Both prices are statewide averages. Utilities and rate plans differ, so use them to compare fuels, then check your own bills for the actual per-therm and per-kWh rates.
Efficiency matters as much as the fuel price because the same electricity buys very different amounts of heat. Baseboard turns each kWh into one kWh of heat. A heat pump moves heat from outdoor air and gets about 2.4 times as much out over a season. Same meter, same 23.98 cents, and the cost per million Btu drops from $70.28 to $29.60.
One detail helps when reading heat pump specs. ENERGY STAR sets the bar at 8.1 HSPF2 for ducted split systems and single-package units, but at 8.5 for non-ducted (ductless) systems. A ductless unit has no duct losses, so it starts ahead and has to be better to earn the same label. The table uses the lower figure, and these are minimums, so a higher-rated unit would run cheaper than $29.60. SEER2 rates cooling and HSPF2 rates heating, so compare the same letter across quotes. The details are in What HSPF2 Measures, and Why Ductless Asks for More. When you compare quotes, line up HSPF2 against HSPF2 and AFUE against AFUE, because efficiency moves the cost per million Btu as much as the fuel price does.
How cold it gets, and what that does to a heat pump
NOAA’s 1991-2020 climate normals for Newark show about 4,701 heating degree days a year (base 65°F). Each day adds up how far the mean temperature sat below 65°F, so the total measures how much fuel a house needs over a winter. Twice the degree days means roughly twice the fuel for the same house. Newark is one station, though, and higher-elevation parts of the state run colder.
The coldest month there has a mean daily minimum of 25.5°F. That is the average low, and individual nights go below it.
The $29.60 figure uses a seasonal efficiency, an average across the whole heating season. On a mild March afternoon the heat pump does better than 2.4. On the coldest nights it does worse, because its output and efficiency drop as outdoor temperatures fall. That is why most systems in colder climates carry a backup, either electric resistance strips inside the air handler or a gas furnace. The backup carries the load on the worst nights, and every hour it runs costs more per Btu than the heat pump alone. How Cold Is Too Cold for a Heat Pump goes through how performance changes as temperatures fall.
The gas furnace has no such swing, since its efficiency barely changes with outdoor temperature. A house with a leaky shell makes any system work harder, so the insulation level shifts both columns of the table together. The timing of the cold months is covered in the New Jersey heating season. Plan on a backup source for the coldest nights, whichever heat pump you pick.
What homes in New Jersey already heat with
The EIA’s 2020 Residential Energy Consumption Survey (RECS) gives the state’s mix. By equipment, furnaces serve 61% of homes, steam or hot-water boilers 25%, and central heat pumps 3%. By main fuel, natural gas heats 75%, electricity 16%, and fuel oil or kerosene 7%. The survey publishes no propane figure for the state, because the estimate was suppressed as unreliable. That is a gap in the survey and does not mean no one uses propane.
With gas in three of every four homes, the running-cost table applies to most households as written.
The 25% of homes with boilers is a different conversion. Radiators or baseboard hot-water loops carry no ducts, so swapping a boiler for a heat pump means either installing ductwork or going ductless with wall or ceiling units in each zone. Ductless or Central covers that choice. The gas comparison holds for a boiler house too, but the work of switching is larger.
The 16% on electricity and the 7% on oil or kerosene have the least reason to stay put on cost grounds. Resistance heat at $70.28 per million Btu loses clearly to a heat pump at $29.60. Oil is priced by the delivery, so ask your supplier for the current per-gallon rate before comparing. A house without a gas line should price the heat pump against the fuel it burns now.
When the other choice wins
The cheaper-to-run furnace is the wrong call in a few common situations. The first is no gas service. If the nearest main does not reach the house, the choice is between a heat pump, resistance heat and oil, and the heat pump comes out well ahead of resistance. Running a new service line adds a cost the per-Btu comparison leaves out.
The second is cooling. Newark averages about 1,270 cooling degree days a year, so air conditioning is part of the New Jersey summer. A heat pump heats and cools with one set of equipment, and ENERGY STAR requires at least 15.2 SEER2 for the label. If the central air conditioner is near the end of its life, the real comparison is a furnace plus a new AC against a single heat pump. The furnace’s lower fuel cost then has to pay back a bigger equipment bill.
The third is a dual-fuel setup, a heat pump paired with a gas furnace. The heat pump handles the many mild hours and the furnace takes over on the coldest nights. Running cost lands between the two columns of the table, and the arrangement removes the worry about a heat pump struggling in a cold snap. It also costs more to install, since you buy both pieces of equipment.
The fourth is a furnace that still works. A system with years left has a sunk cost that no running-cost table captures, and swapping early means paying for a new system while the old one still heats the house. Repairing a Furnace or Replacing It lays out when repair stops making sense. Keep a sound furnace running and add a heat pump when the AC fails or the furnace does.
Common questions
Is a heat pump cheaper to run than electric baseboard in New Jersey?
Yes. At average residential prices, a heat pump at 8.1 HSPF2 delivers a million Btu for $29.60, while electric resistance costs $70.28. The same electricity gets turned into more heat.
Does a heat pump work through a New Jersey winter?
Yes, with limits. The coldest month at Newark has a mean daily minimum of 25.5°F, and a heat pump’s efficiency falls as it gets colder. Most installations pair it with resistance strips or a furnace to cover the coldest nights.
What does HSPF2 measure?
It rates a heat pump’s heating efficiency over a full season. ENERGY STAR asks for at least 8.1 HSPF2 from ducted split and single-package systems and 8.5 from non-ducted systems.
What do most New Jersey homes heat with?
The EIA’s 2020 survey puts natural gas at 75% of homes, electricity at 16% and fuel oil or kerosene at 7%. Furnaces serve 61% of homes, boilers 25% and central heat pumps 3%.