How It Works
- Heat your house uses. A therm is 100,000 Btu.(EIA) Your furnace turns its AFUE percentage of that into heat in the house; AFUE is the federal efficiency rating for furnaces.(ENERGY STAR) So 720 therms in an 80% furnace is 57.6 million Btu of heat.
- Gas cost. Therms × (your utility's delivery charge + gas supply price). The daily customer charge is left out, because you pay it as long as any gas appliance is connected.
- Heat pump electricity. HSPF2 is Btu of heat delivered per watt-hour of electricity over a heating season.(10 CFR 430, App. M1)(DOE) Heat ÷ (HSPF2 × 1,000) gives kWh. At 8.1 HSPF2, 57.6 million Btu takes about 7,100 kWh.
- Electric cost. kWh × your utility's residential energy charge from its PSC tariff.
- Break-even. The HSPF2 at which both cost the same. Dividing HSPF2 by 3.412 (Btu in a watt-hour)(EIA) gives the seasonal COP, heat out per unit of electricity in.
A Worked Example
A Madison home on MGE electric and gas burning 720 therms a year in an 80% furnace. At MGE's delivery charge plus its average gas cost for January to March 2026 ($0.7088 a therm, our average of MGE's posted monthly figures),(MGE) the gas costs about $745 a year. A heat pump rated 8.1 HSPF2 (ENERGY STAR's cold-climate minimum for ducted systems)(ENERGY STAR) would use about 7,111 kWh, about $1,311 at MGE's $0.1843 per kWh. Break-even is an HSPF2 of about 14.3.
The gas price moves the answer more than anything else. At February 2026's MGE price, the highest of the year, the gas would cost about $896 and break-even is about 11.8. At October's, the lowest, the gas costs $347 and break-even is out of reach. Either way it's above ENERGY STAR's cold-climate minimum of 8.1. MGE suggests a dual-fuel setup, a heat pump with a gas furnace for the coldest months,(MGE) and says heat pumps make the most sense in homes now heated with electric resistance, propane, wood or fuel oil.(MGE)
Electric resistance heat (baseboards, a furnace's backup strips) has a COP of 1:(DOE Building America) every kWh becomes 3,412 Btu. Against resistance heat, any heat pump wins by a wide margin. Try it in the calculator.
Ratings and Cold Weather
- Minimums. A split-system heat pump made since 2023 must meet 7.5 HSPF2; a non-weatherized gas furnace must meet 80% AFUE.(10 CFR 430.32) ENERGY STAR furnaces in the northern U.S., Wisconsin included, must be 97% AFUE or more.(ENERGY STAR)
- Cold-climate label. ENERGY STAR's cold-climate heat pumps need a COP of at least 1.75 at 5°F and at least 70% of their rated heating capacity at 5°F.(ENERGY STAR)
- What the rating assumes. The HSPF2 on the label is calculated for DOE climate Region IV.(10 CFR 430, App. M1) Region IV uses a 5°F outdoor design temperature and 1,701 heating load hours; Region V uses −10°F and 2,202 hours.(10 CFR 430, App. M1) The rating already counts backup resistance heat, so a colder climate means a lower seasonal figure.(10 CFR 430, App. M1)
- Madison's winters. Madison averages 7,138 heating degree days a year, and its normal coldest temperature of the year is −17°F.(National Weather Service) DOE says conventional heat pumps lose capacity and efficiency as it gets colder,(DOE) so enter an HSPF2 below the label figure to see a cautious case.
The Rates Used
| Electric utility | Per kWh, 2026 | Approved for 2027 |
|---|---|---|
| MGE | $0.1843 | $0.1929 |
| Alliant Energy (WPL) | $0.1701 | $0.1805 |
| Sun Prairie Utilities | $0.1085 | — |
| Waunakee Utilities | $0.1084 | — |
| Stoughton Utilities | $0.1140 | — |
| Mount Horeb Utilities | $0.1199 | — |
| Gas utility | Delivery per therm | Supply per therm, Oct. 2026 |
|---|---|---|
| MGE | $0.3253 | $0.1570 |
| Alliant Energy (WPL) | $0.3666 | $0.1241 |
| We Energies (Wisconsin Gas) | $0.4372 | $0.4237 |
Each rate's tariff, PSC docket and effective date is on utility costs by town. Supply is the utility's published total per therm minus its delivery charge. Neither MGE nor Alliant has a heat-pump-specific rate in its 2026-2027 rate decision.(PSC final decision)
Before You Decide
- Rebates. Alliant gives instant discounts on heat pumps starting at 15.2 SEER2 / 8.1 HSPF2.(Alliant Energy) Focus on Energy and federal programs are in energy rebates.
- Cooling. A heat pump also replaces your central air conditioner; this calculator counts heating only.
- Rates will change. MGE and Alliant base rates rise again on January 1, 2027, and We Energies has a gas rate case pending. Why utility bills went up has the dockets.
- Repairs first? Furnace and AC repair covers the checks to make before replacing anything, and winter shutoff rules covers help if a heating bill gets away from you.
Questions
Is a heat pump cheaper to run than a gas furnace in Madison?
Not at 2026 MGE rates, for a typical home. A home burning 720 therms a year in an 80% furnace would pay about $745 for gas at MGE's January to March 2026 gas cost; a heat pump rated 8.1 HSPF2 would use about $1,311 of electricity for the same heat. Break-even takes an HSPF2 of about 14.3. The answer changes with gas prices, your furnace's efficiency and your electric rate, and against propane or electric resistance heat a heat pump wins by a wide margin.
What does HSPF2 mean?
Heating Seasonal Performance Factor 2: the heat a heat pump delivers over a heating season, in Btu, divided by the electricity it uses, in watt-hours. It includes the electric backup heat used on the coldest days. The federal minimum for a split-system heat pump is 7.5; ENERGY STAR's cold-climate label requires 8.1 for ducted systems.
Is the HSPF2 rating accurate for Wisconsin?
The rating on the label is calculated for DOE's climate Region IV, which uses a 5°F design temperature. Colder regions have more hours below the heat pump's balance point and so a lower seasonal figure. Madison's normal coldest day of the year is −17°F.
Does MGE or Alliant have a special heat pump rate?
Not in the 2026-2027 rate decisions. Both offer optional time-of-use rates. Alliant gives instant discounts on heat pumps rated at least 8.1 HSPF2.