In New Mexico, a 95% efficient gas furnace is the cheaper system to run, and the gap is big enough to notice. A heat pump still beats electric baseboard by a wide margin, and it cools the house too. Which one saves you money depends on whether gas reaches your street, how much air conditioning you use, and how much life is left in the equipment you already own.
The short answer for New Mexico
The numbers come from a computation built on EIA residential prices for electricity and natural gas, ENERGY STAR efficiencies and EIA energy conversions. Per million Btu of heat delivered to the house, a gas furnace at 95% AFUE costs $9.98. A heat pump at 8.1 HSPF2 costs $18.62. Electric resistance baseboard costs $44.20. The gas furnace runs $8.64 less per million Btu than the heat pump.
Two limits on those figures. They compare fuels on the same unit of heat, so they are a running cost, not a yearly bill. Your bill depends on square footage, insulation, duct condition and how warm you keep the thermostat. They also say nothing about the price of the equipment or its installation, and that is where the order can flip.
The heat pump number uses the ENERGY STAR minimum HSPF2, a seasonal average. A better-rated unit would deliver heat for less than $18.62, and a cold snap would push it the other way. The gas side rests on a statewide residential price. Utilities set their own rates, so your gas company’s current rate schedule is the number to check against these averages.
If gas service already reaches your meter, the furnace is the cheaper system to run; if it does not, the heat pump is the cheaper electric choice by a wide margin.
What each option costs to run in New Mexico
| System | Efficiency used | Cost per million Btu delivered |
|---|---|---|
| Natural gas furnace | 95% AFUE | $9.98 |
| Heat pump | 8.1 HSPF2 (seasonal COP about 2.4) | $18.62 |
| Electric resistance (baseboard) | 100% efficient | $44.20 |
The electricity price behind the table is 15.08 cents per kWh, the average residential price year-to-date through July in the EIA’s Electric Power Monthly (Table 5.6.B). It is a statewide average, so treat it as a basis for comparison, not as your rate. The gas figure uses the EIA’s average residential natural gas price for the state, converted at about 1,037 Btu per cubic foot. Electricity converts at 3,412 Btu per kWh.
Efficiency matters as much as fuel price because you pay for the fuel, not for the heat. Baseboard turns one unit of electricity into one unit of heat. A heat pump moves heat that already exists outdoors, so a seasonal COP of about 2.4 means roughly 2.4 units of heat for each unit of electricity. A furnace at 95% AFUE wastes only a sliver of its gas up the flue. Electricity costs more per Btu than gas here, and the heat pump’s multiplier closes most of that gap without closing all of it. For what the rating itself measures, see What HSPF2 Measures, and Why Ductless Asks for More.
Rank the three by delivered heat, not by fuel price: gas furnace first, heat pump second, baseboard a distant third.
How cold it gets, and what that does to a heat pump
The reference city is Albuquerque, where NOAA’s 1991-2020 climate normals show about 3,996 heating degree days a year (base 65 F). Heating degree days add up, for every day, how far the mean temperature sat below 65 F, so they translate climate into fuel. Roughly twice the degree days means roughly twice the fuel for the same house. That is a real heating season, not a token one.
The coldest month tells you more about the nights. In Albuquerque the mean daily minimum in the coldest month is 26.4 F, which is below freezing. Afternoons can be mild while mornings are not, and that split is exactly where a heat pump’s seasonal rating hides detail.
The 2.4 COP behind the $18.62 figure is a seasonal average. In deep cold a heat pump’s efficiency drops, and the electric strips or furnace that back it up carry the coldest nights. Those hours cost more per Btu than the average suggests. The longer you spend near the bottom of the temperature range, the more your real cost drifts above the table. I won’t give a temperature cutoff here, because it varies by model; the details are in How Cold Is Too Cold for a Heat Pump.
Albuquerque is one station. A mountain county in the same state can run far colder, with more degree days and lower nights, and every cold-weather caveat gets stronger there. In that kind of terrain the backup heat does more of the work, and the average-price comparison favors gas more than the table suggests.
In the Albuquerque area a heat pump with backup is workable, but at higher elevations size the backup for the coldest nights, not the average ones.
What homes in New Mexico already heat with
The EIA’s 2020 Residential Energy Consumption Survey gives the state’s main heating picture. Furnaces are the main equipment in 67% of homes, and steam or hot-water boilers in 7%. By fuel, natural gas heats 76% of homes and electricity 13%. Those shares say what was installed, which tells you which fuel was cheap and available when the houses were built. They are not a recommendation. They are also state shares from a national survey, not a count for your county. For the wider local picture, see Heating a Home in New Mexico.
Some entries are blank, and a blank is not a zero. The survey reports no figure for central heat pumps because the estimate was suppressed as unreliable. For fuel oil or kerosene, none was reported, which means too few households were found to publish a number. Propane was also suppressed. None of that says nobody heats with a heat pump, oil or propane here. It says the survey does not publish a figure.
What this means for the choice is practical. With gas in three out of four homes, the typical house already has a gas furnace and ductwork, which makes the cheaper-to-run answer the default. A house without a gas line is in a different comparison: the real contest is heat pump against baseboard, and the heat pump wins by the table. A house with a boiler and radiators is a different conversion again, since it has no ducts to reuse.
If your house has no gas line, compare a heat pump against baseboard or other fuels, not against a gas furnace you cannot connect to.
When the other choice wins
Running cost is one input. Several situations make the heat pump the better call even though gas is cheaper per Btu.
- No gas service at the property, or a gas hookup that would cost a lot to bring in.
- A real need for air conditioning, because one heat pump does both jobs.
- A dual-fuel plan, with the heat pump running most of the season and a gas furnace covering the coldest nights.
- A boiler house without ducts, where a ductless system can be the practical path.
Cooling is the strongest argument. Albuquerque logs about 1,438 cooling degree days a year in the same NOAA normals, so air conditioning is a real part of the year, not an afterthought. If you would otherwise buy a furnace and a separate air conditioner, a single heat pump replaces both. ENERGY STAR’s criteria ask for at least 15.2 SEER2 for the cooling side. Comparing running costs for heating alone ignores that second job.
The other direction matters too. A furnace with years of service left is usually the cheaper path to keep running, and Repairing a Furnace or Replacing It walks through that decision. If ducts are missing or leaky, Ductless or Central covers the trade-offs. I would not rip out a working gas furnace purely on a per-Btu comparison, because the equipment cost can swallow years of savings.
Keep the gas furnace if it works and you have gas; choose the heat pump when you lack gas, need cooling anyway, or are replacing both systems at once.
Common questions
Is a heat pump cheaper to run than electric baseboard in New Mexico?
Yes, by a wide margin on the same unit of heat. The computed figure is $18.62 per million Btu for a heat pump at 8.1 HSPF2 against $44.20 for baseboard, both from EIA residential electricity prices and ENERGY STAR efficiencies.
Will my own utility rates change the answer?
They can shift the size of the gap. The 15.08 cents per kWh is a statewide average and the gas price is also a statewide figure. Look up your utility’s residential rates and compare, though the furnace’s lead of $8.64 per million Btu gives it a cushion at average prices.
Do I need backup heat with a heat pump here?
In Albuquerque the coldest month has a mean daily minimum of 26.4 F, and a heat pump’s efficiency drops in deep cold. Backup strips or a furnace carry the coldest nights. Higher-elevation areas can run far colder than the reference city, so plan the backup more carefully there.
How do I compare two heat pump quotes?
Compare the same letter on both: HSPF2 for heating, SEER2 for cooling. ENERGY STAR asks for at least 8.5 HSPF2 from non-ducted split systems and 8.1 from ducted ones, because a ductless system has no duct losses and has to do better to earn the same label. Those are minimums to earn the label, not typical values.