In Montana, a natural gas furnace costs less to run than a heat pump, and by a wide margin. A heat pump still beats electric baseboard by a long way, though. Several situations (no gas line, a wish for air conditioning, a house with a boiler) can make the pricier-to-run option the smarter buy.
The short answer for Montana
Federal price data put the gas furnace ahead. Computed from EIA residential prices and ENERGY STAR efficiencies, one million Btu of heat delivered into a Montana house costs $8.94 with a natural gas furnace at 97% AFUE. A heat pump at 8.1 HSPF2 (seasonal COP about 2.4) costs $17.22, and electric baseboard costs $40.89. The gas furnace is the cheapest to run here, $8.28 less per million Btu than the heat pump.
Read that carefully. It is a running-cost comparison on the same unit of heat, not a yearly bill. A yearly bill depends on square footage, insulation, window quality and how warm the household likes to live. It is also not the price of the equipment, which is a separate question with its own quotes and installation costs.
The gas figure rests on a statewide average from EIA. Your utility’s actual rate may land higher or lower, so check your latest bill before leaning on any single number.
For most people reading this, the practical takeaway is simple. If a gas line already reaches your house, gas wins on running cost; if it doesn’t, a heat pump is the clear second choice and baseboard comes last.
What each option costs to run in Montana
| System | Efficiency used | Cost per million Btu delivered |
|---|---|---|
| Natural gas furnace | 97% AFUE | $8.94 |
| Heat pump | 8.1 HSPF2 (seasonal COP about 2.4) | $17.22 |
| Electric resistance (baseboard) | 100% | $40.89 |
The electricity side comes from the U.S. Energy Information Administration: an average residential price of 13.95 cents per kWh, year-to-date through July in its Electric Power Monthly, Table 5.6.B. The gas side uses EIA’s average residential natural gas price, converted at about 1,037 Btu per cubic foot, and electricity is converted at 3,412 Btu per kWh. Both are statewide averages, and utilities and rate plans differ.
Fuel price alone doesn’t settle the ranking. Baseboard turns each kilowatt-hour into one kilowatt-hour of heat, nothing more. A heat pump moves heat from outdoor air instead of making it, so at a seasonal COP of about 2.4 it delivers about 2.4 units of heat for each unit of electricity it draws. A 97% AFUE furnace wastes little of its gas. That is why the same electricity price produces $40.89 in one machine and $17.22 in another.
The heat pump row uses the ENERGY STAR minimum for a ducted system, and the label asks more of a ductless one. ENERGY STAR requires 8.5 HSPF2 for non-ducted split systems against 8.1 for ducted, because a ductless unit has no duct losses and starts with an advantage. These are minimums to earn the label, not typical values. If you are comparing two units, compare the same letters; what HSPF2 measures, and why ductless asks for more explains the gap, and SEER2 only describes cooling.
How cold it gets, and what that does to a heat pump
Winter works hard in Montana. At Billings Logan International Airport, NOAA’s 1991-2020 normals show about 6,754 heating degree days a year (base 65°F). That number adds up, for every day of the year, how far the mean temperature sat below 65°F. More degree days means more fuel for the same house, and 6,754 describes a long heating season.
The coldest month averages a daily minimum of 17.9°F at the same station. Billings is one reference city. A mountain county in the same state can run far colder, and the heating load there climbs with it.
The $17.22 heat pump figure uses a seasonal average efficiency. In deep cold, a heat pump’s efficiency drops, so the coldest nights cost more per unit of heat than that average suggests. Most systems handle those nights with a backup, either resistance strips inside the air handler or a furnace. Resistance heat runs at the baseboard rate of $40.89 per million Btu, which is why the backup matters to the bill and not only to comfort.
Cold-climate heat pumps are built to hold their output longer as temperatures fall, and how well one does it varies from model to model. Our look at how cold is too cold for a heat pump goes through what to ask for.
Before you sign for a heat pump, get the installer to name the backup heat and tell you how much of a cold stretch it would carry. The answer tells you whether your real winter cost sits near the seasonal figure or well above it.
What homes in Montana already heat with
The Energy Information Administration’s 2020 Residential Energy Consumption Survey gives a clear picture of the installed base. A furnace is the main heating equipment in 65% of Montana homes, and a steam or hot-water boiler heats 10%. By fuel, natural gas leads at 59%, electricity follows at 24%, and propane serves 9%.
Two entries are missing. The survey does not publish a figure for central heat pumps or for fuel oil or kerosene, because those estimates were suppressed as unreliable. That is not the same as zero. It means the survey cannot say how many Montana homes use them.
These are shares of what was installed, which tells you which fuel was cheap and available when the houses were built. They are not a recommendation, and they are state averages, not a count for your county. For the broader picture, see heating a home in Montana.
The decision changes with the house. A home without a gas line has no gas option at the $8.94 rate. Its realistic choices are a heat pump, baseboard or propane (the propane price must come from a local supplier, since FACTS carry none). A boiler house is a different conversion altogether, because hot-water radiators have no ducts for a ducted heat pump to use. A ductless system avoids that problem.
Match the new system to what your house already has, whether that is a gas line, ductwork or radiators, before you compare fuel prices.
When the other choice wins
The cheaper-to-run system is not always the right call. A house with no gas service is the plainest case. The comparison there is the heat pump at $17.22 against baseboard at $40.89 per million Btu, and the heat pump wins easily. Running a new gas line to a house that has none is a separate cost that no running-cost table captures.
Air conditioning changes the math too. Billings averages about 663 cooling degree days a year, a modest cooling load next to its heating load, but not zero. A heat pump cools as well as heats, so a house that needs a new air conditioner anyway can fold both jobs into one machine. If you plan on a ductless setup, ductless or central lays out how the two layouts differ.
A dual-fuel setup pairs a heat pump with a gas furnace that takes over on the coldest nights. In mild weather a heat pump runs more efficiently than its seasonal average, which narrows the gap with gas. In deep cold the furnace carries the load and the weak point of the heat pump never reaches your bill. It makes the most sense when you need a new cooling system anyway.
Last, an old furnace with years left. If it still runs safely and you can get it repaired, its low running cost is hard to beat. The article on repairing a furnace or replacing it covers the signs that tip the choice.
If your gas furnace works and you need cooling soon, price a dual-fuel setup before you retire the furnace.
Common questions
Is a heat pump cheaper to run than electric baseboard in Montana?
Yes. At 8.1 HSPF2, the heat pump costs $17.22 per million Btu delivered, against $40.89 for electric resistance. Both figures come from EIA residential prices and ENERGY STAR efficiencies.
Does the $8.94 figure for gas show my yearly bill?
No. It is the cost of one million Btu of heat at statewide average prices. Your bill depends on the size of the house, its insulation, your habits and your utility’s rates.
Will a heat pump keep up when it is 17.9°F outside?
That number is the average daily minimum of the coldest month at Billings, not a record low. A heat pump’s efficiency drops in deep cold, and most installations rely on backup heat for the coldest nights. Ask the installer how the unit is rated for your lowest temperatures.
Can I keep my gas furnace and add a heat pump?
Yes, and that is the dual-fuel arrangement. The heat pump handles milder weather and cooling, and the furnace covers the coldest stretches.