Sources: EIA Residential Energy Consumption Survey, NREL ResStock, my Madison Gas & Electric bills, Focus on Energy program data
Why I switched (and what I expected)
Short version: my furnace died on a Tuesday in October 2024. It was 22 years old. The heat exchanger had a hairline crack, the inducer motor had been making sounds for a year, and the technician was honest enough to say I'd be paying for the repair twice over before another winter ended.
I had two days to make a call: drop in another mid-efficiency gas furnace for about $5,800, or do the heat pump conversion I kept putting off. Most of my coworkers thought I'd gone soft on the upgrade. Wisconsin gets cold. Heat pumps and cold are a meme on HVAC forums for a reason.
What pushed me over: I had a 7-year-old central AC that was also on borrowed time, and replacing both gas furnace and AC separately would have cost more than a single ducted cold climate heat pump that does both jobs. Once I ran the numbers that way, the gap closed fast.
Quick note on the federal credit
I qualified for the 30% Section 25C federal tax credit because I installed in 2024. That credit expired December 31, 2025. If you're reading this in 2026 or later, your math has to work without it. State and utility programs are still available in most states — check the calculator for your ZIP.
The house, the old setup, the new gear
Context matters more than people realize when you're comparing bills, so here's the full picture of what we started with and what we ended up with.
Before
- 1962 ranch, 1,640 sq ft, full basement
- R-19 attic, R-13 walls, double-pane windows from 2009
- Blower door tested at 4.2 ACH50 (a little leaky)
- 22-year-old 80% AFUE gas furnace, 80,000 BTU
- 2.5-ton central AC, 7 years old
- Madison Gas & Electric, ~$0.165/kWh, ~$0.95/therm
After
- 4-ton ducted cold-climate heat pump
- Mitsubishi Hyper-Heat, rated to -13°F
- Variable-speed inverter, COP ~3.0 at 47°F
- 10 kW electric resistance backup (auxiliary heat)
- New air handler, same ductwork (sealed)
- 200-amp panel upgrade required
One detail that matters for the bill comparison: I did not air seal the house, swap windows, or add insulation during the conversion. The envelope is the same as it was under the gas furnace. So when the bills move, it's because of the heat pump, not because of an upgrade I'm hiding.
14 months of bills, side by side
I pulled the gas furnace year (Nov 2023 – Oct 2024) and the heat pump year (Nov 2024 – Apr 2026, normalized to 14 months). Heating degree days were within 4% across both periods, which is close enough that I didn't bother weather-normalizing.
| Month | Gas year (HVAC only) | Heat pump year (HVAC only) | Difference |
|---|---|---|---|
| November | $112 | $94 | −$18 |
| December | $184 | $162 | −$22 |
| January | $226 | $241 | +$15 |
| February | $201 | $178 | −$23 |
| March | $148 | $108 | −$40 |
| April | $94 | $61 | −$33 |
| May | $58 | $44 | −$14 |
| June (AC) | $72 | $61 | −$11 |
| July (AC) | $118 | $104 | −$14 |
| August (AC) | $129 | $112 | −$17 |
| September | $78 | $66 | −$12 |
| October | $94 | $78 | −$16 |
| November (Y2) | $118 | $96 | −$22 |
| December (Y2) | $192 | $170 | −$22 |
| 14-month total | $1,824 | $1,575 | −$249 |
Note: gas-year HVAC-only figures are reconstructed by subtracting baseline electric load (lighting, appliances, water heat — gas) from total bills. Heat pump year does the same with my submeter data.
Across 14 months, the heat pump came in $249 cheaper. Annualize that and call it roughly $215 a year. Not life-changing. That's before the rebates and the credit, which I'll get to.
The interesting line in that table is January. That's the only month the heat pump cost more, and it's also the month people on Reddit have strong opinions about. Let's talk about it.
The polar vortex stress test
January 13–22, 2025. Madison hit −22°F overnight on the 18th and didn't crack zero for almost a week. This is exactly the scenario heat pump skeptics warn you about.
Here's what actually happened. The Hyper-Heat unit kept running below zero, but its output dropped from 48,000 BTU/hr at 47°F to about 28,000 BTU/hr at −10°F. My house needs maybe 42,000 BTU/hr at design temp. So the heat pump alone could not keep up, and the 10 kW resistance strips kicked in to fill the gap.
Resistance heat is expensive. For about three days, my effective COP dropped to roughly 1.3 because the strips were handling a quarter of the load. I burned through 412 kWh in one day on January 18 — at $0.165/kWh, that's $68 for one 24-hour period.
What January actually cost me
- $241 total HVAC (vs. $226 with gas — a $15 hit)
- $184 of that came from just three polar vortex days
- 28 days the rest of January averaged $2.04/day, cheaper than gas would have been
- No comfort issues. House stayed at 68°F the whole time.
If I'd kept the gas furnace as backup (a dual-fuel setup), the system would have switched to gas around 5°F and I'd have paid roughly $40 less for that week. Worth it? Honestly, yes. If your gas furnace still has life in it, leaving it in place as a backup is the play.
Two things that surprised me
1. Summer was a bigger win than winter
I expected to write a winter story. The summer numbers were actually more interesting. The variable-speed compressor on the new unit runs at a low part-load most of the day instead of slamming on and off like my old AC. June through August came in $42 cheaper combined, and the dehumidification was noticeably better. My basement smelled like a basement before. Now it doesn't.
2. The shoulder seasons were where the real savings lived
March, April, October, November — those four months alone accounted for $109 of my $249 in savings. The heat pump runs at peak efficiency (COP near 3) when the outdoor temp is in the 40s. A gas furnace can only ever return 95 cents on the dollar at best. The heat pump returns three dollars of heat per dollar of electricity at those temperatures. That gap adds up fast over a month.
If you live somewhere milder than Wisconsin (which is most of the country), you basically live in shoulder season. That $109 of savings I got across four months becomes the entire heating season for someone in Charlotte or Portland.
What it actually cost to install
I got four quotes. They ranged from $11,200 to $19,400 for roughly the same equipment. I went with the $14,800 quote because the contractor did a real Manual J load calculation and the cheaper guy admitted he was just sizing off square footage. Don't skip the load calc.
My installation invoice
Compared to the $5,800 gas furnace replacement plus a future $4,500 AC replacement, my marginal upcharge for going heat pump instead of like-for-like was about $900 net. With $215 a year in operating savings, that pays back in roughly four years.
If you're doing the swap in 2026 without the federal credit, your number is going to be roughly $2,000 worse than mine on out-of-pocket. State and utility rebates are still there in most places. Run your ZIP through the calculator to see what stacks where you live.
Three mistakes I would not make again
Skipping the air sealing first
My house tested at 4.2 ACH50. If I'd spent a weekend and $300 on can foam, weatherstripping, and sealing rim joists, I could probably have downsized to a 3-ton unit and shaved $1,800 off the install. The heat pump contractors don't mention this because they're not in the air sealing business.
Going all-electric instead of dual fuel
My gas furnace was dying, so I had a real reason. If yours isn't, keeping it as a backup below the balance point is the smarter play. You ditch the polar vortex risk and you save the cost of the resistance strips. The trade-off is you're still paying a gas hookup fee year-round.
Not getting a fifth quote
Four quotes felt like enough. A neighbor did the same job six months later for $12,400 with a smaller local contractor I hadn't called. Same equipment. Heat pump pricing is wildly inconsistent right now because the market is still settling out. Get more quotes than feels reasonable.
Should you do it?
I keep getting asked this. The honest answer is: it depends on two numbers and one piece of timing.
Probably yes if...
- ✓Your existing furnace or AC is on its last year or two
- ✓Your electricity rate is under $0.20/kWh
- ✓You live somewhere that gets above 0°F most winter days
- ✓Your state still has a heat pump rebate program
- ✓You're replacing AC anyway and a heat pump just adds heating capability
Maybe wait if...
- ✗Your gas furnace is less than 8 years old and works fine
- ✗Electricity in your area is $0.30/kWh or higher
- ✗Your home is large, leaky, and you can't justify air sealing first
- ✗Your panel is 100A and full, and the upgrade alone runs $4k+
- ✗You're moving in less than 4 years
For me it was the right call. The bills came down, the comfort got better, and I genuinely don't miss the gas hookup. If someone tells you a heat pump can't handle a Wisconsin winter, send them this article. Then send them the calculator so they can run their own numbers instead of arguing about it on Facebook.
Find your heat pump rebates
Enter your ZIP to see state heat pump rebates, utility programs, and what a system might actually cost where you live. Free, no email required.
Check My ZIPFrequently asked questions
Is a heat pump cheaper to run than a gas furnace in 2026?
It depends on your local gas and electricity rates. In my Wisconsin home with $0.165/kWh electricity and $0.95/therm gas, the heat pump ran cheaper from October through April except during the coldest two weeks of January, when auxiliary heat kicked in and the cost briefly matched gas. Across 14 months, total HVAC bills came in 18% lower.
Do heat pumps actually work in cold climates?
Modern cold-climate units (rated to -13°F or lower) work fine down into the single digits. Below about -5°F, output drops and you start needing supplemental heat. I lost about three days of pure heat pump operation last winter during a polar vortex. The other 362 days, it ran without help.
How much does a heat pump cost to install in 2026?
I paid $14,800 for a 4-ton cold-climate ducted heat pump installed, including a new evaporator coil and electrical panel work. Quotes ranged from $11,200 to $19,400. The federal 25C credit expired at the end of 2025, but Wisconsin's Focus on Energy program rebated $1,200 and my utility added another $400.
Will my electric bill go up if I switch to a heat pump?
Yes, electric bills go up. Mine roughly doubled in winter months. The savings come from the gas bill dropping to almost nothing and from the heat pump giving you free air conditioning in summer. Compare total HVAC spending across the year, not the electric bill in isolation.
What is a balance point and why does it matter?
The balance point is the outdoor temperature at which your heat pump can no longer keep up with your home's heat loss. Below that point, you need supplemental heat (electric strips or a gas backup). For my home it's about 5°F. A good HVAC contractor will calculate this for you using a Manual J load calculation.
Should I keep my gas furnace as backup?
Dual-fuel setups are popular for a reason. If your gas furnace still has 5+ years of life, keeping it as the backup heat source past your balance point can save money on the coldest days. I went all-electric, but only because my furnace was already 22 years old and dying.
How long do heat pumps last?
Most cold-climate heat pumps are rated for 15 to 20 years, similar to a gas furnace. The compressor is the wear part — it runs year-round (heating and cooling) instead of just six months, so maintenance matters more. Expect to replace the outdoor unit before the indoor air handler.
Sources and references
Ben Castro
Senior Building Performance Analyst • BPI Building Analyst, B.S. Mechanical Engineering
Ben spent nine years auditing residential heating and cooling systems for a regional energy office in the upper Midwest. He is a BPI Building Analyst and holds a B.S. in Mechanical Engineering from Marquette. His own 1962 ranch in Madison, Wisconsin is his unwilling test bed — every system change becomes a write-up like this one.