By Mario Vaghei, General Manager, Aire One Peel Heating & Cooling · Published November 2, 2026 · Facts verified October 30, 2026
Short answer
For most Ontario homes that already have natural gas and ductwork, a high-efficiency gas furnace is still the cheapest to run: about 2.9 cents per kWh of heat at November 2026 rates. A cold-climate heat pump adds air conditioning, and is close to gas on cost in mild weather. Pairing it with a furnace (dual fuel) lets each run when it is cheaper. Homes heated by electric baseboard, oil or propane gain the most from a heat pump, with rebates of up to $7,500. The best system for you depends on your fuel, your ducts and whether you want cooling.
On this page
The five options at a glance · Gas furnace: the cheapest heat for most gas homes · Cold-climate heat pump: heating and cooling in one · Dual fuel: let each system do what it is best at · Boiler: for homes with radiators or in-floor heat · Electric baseboard: simple, but the most expensive to run · How to choose · Get advice for your home · Frequently asked questions
The five options at a glance
| System | Needs ducts? | Cools too? | Energy cost per kWh of heat (Nov 2026) | Ontario rebate | Typical lifespan |
|---|---|---|---|---|---|
| High-efficiency gas furnace (95% AFUE) | Yes | No (add central air) | About 2.9¢ | None for the furnace itself | 15 to 20 years |
| Cold-climate air-source heat pump | Ducted or ductless | Yes | About 3.0¢ in mild weather, 4.5¢ to 6.5¢ in deep cold or at peak | Up to $7,500 (electric, oil, propane homes); up to $2,000 (gas homes) | 10 to 15 years |
| Dual fuel (heat pump + gas furnace) | Yes | Yes | Heat pump in mild weather, gas in the cold | Heat pump rebate applies | Each part as above |
| Gas boiler (radiators or in-floor) | No (pipes) | No | Burns the same gas as a furnace | None listed here | Not covered in this guide |
| Electric baseboard | No | No | 9.1¢ to 18.9¢ (every kWh of power = 1 kWh of heat) | Switching to a heat pump: up to $7,500 | Not covered in this guide |
Table sources:
- Energy costs from our heat pump vs furnace running cost guide: Ontario Energy Board electricity rates effective November 1, 2026 (time-of-use 9.1¢, 14.6¢, 18.9¢) and Enbridge Gas at 28.5¢ per cubic metre. Energy only; excludes HST, the fixed monthly gas charge, and electricity delivery and regulatory charges.
- Rebates from the Home Renovation Savings program, re-read October 30, 2026: $1,250 per ton up to $7,500 for homes heated by electricity, oil, propane or wood; $500 per ton up to $2,000 for natural gas homes. Pre-approval is mandatory and a participating contractor submits the application.
- Lifespans from our furnace lifespan guide and Carrier Canada for heat pumps, summarized in our heat pump lifespan guide.
Gas furnace: the cheapest heat for most gas homes
If you already have gas and good ductwork, a high-efficiency furnace gives the lowest cost per unit of heat at today's rates. It does not cool, so most homes pair it with central air. Installed furnaces in Mississauga run about $3,500 to $8,500 in 2026, depending on size, efficiency and the work involved. Our new furnace cost guide breaks that down.
Cold-climate heat pump: heating and cooling in one
A heat pump moves heat instead of making it. In mild weather it delivers close to three units of heat for each unit of electricity, which puts it near gas on cost. As it gets colder it works harder and the cost per unit of heat rises. A cold-climate model keeps heating well below freezing. It also replaces your air conditioner. Carrier Canada gives a broad installed range of about $4,050 to $20,250 or more, depending on the system. Our heat pump installation page covers what we install.
Dual fuel: let each system do what it is best at
A dual-fuel (hybrid) system adds a heat pump to a gas furnace. The heat pump heats in milder weather and cools in summer. The furnace takes over on the coldest days. It keeps the comfort and backup of gas while using less of it. Our dual-fuel guide explains how the changeover works.
Boiler: for homes with radiators or in-floor heat
A boiler heats water and sends it through radiators or in-floor tubing. It gives quiet, even heat and has no ducts, which also means there is no ductwork for central air. A gas boiler burns the same gas as a furnace, so its fuel cost is in the same range for the same efficiency. If you already have radiators, a new boiler usually makes more sense than adding ducts.
Electric baseboard: simple, but the most expensive to run
Baseboard heaters turn one kWh of electricity into one kWh of heat. At 9.1¢ to 18.9¢ per kWh, that is several times the cost of gas heat. This is the case where a heat pump pays off fastest, and where the rebate is largest: up to $7,500 for homes heated by electricity, oil or propane. A ductless heat pump works in homes with no ducts.
How to choose
- You have gas and ducts, and want the lowest heating bill: a high-efficiency gas furnace.
- You have gas and ducts, and need a new air conditioner too: consider dual fuel.
- You heat with electric baseboard, oil or propane: a cold-climate heat pump, with the larger rebate.
- You have radiators or in-floor heat: a high-efficiency boiler.
- Your furnace is old but working: our furnace lifespan guide shows when to start budgeting.
For a wider look at efficiency options, see our guide to energy-efficient HVAC options in Ontario.
Get advice for your home
We install furnaces, heat pumps and dual-fuel systems, and give a written quote after a site visit. See our furnaces page and heat pump installation page. We serve Mississauga, Brampton, Etobicoke, Milton, Georgetown, Caledon and Bolton. In Brampton, our page on heating and cooling in Brampton covers furnaces, air conditioners and heat pumps. Call 905-564-8545.
Frequently asked questions
What is the best home heating system in Ontario?
For most homes with natural gas and ducts, a high-efficiency gas furnace is the cheapest to run, at about 2.9 cents per kWh of heat at November 2026 rates. Homes on electric baseboard, oil or propane usually do best with a cold-climate heat pump.
Is a heat pump cheaper than a gas furnace in Ontario?
Not usually for a gas home at current rates. A heat pump costs about 3.0 cents per kWh of heat in mild weather on off-peak power and 4.5 to 6.5 cents in deep cold or at peak, compared with about 2.9 cents for a 95% efficient gas furnace. Against electric baseboard, a heat pump is much cheaper.
What is the cheapest way to heat a house in Ontario?
At November 2026 rates, natural gas in a high-efficiency furnace has the lowest energy cost per unit of heat. Electric baseboard has the highest, at 9.1 to 18.9 cents per kWh.
Is there a rebate for switching to a heat pump in Ontario?
Yes. The Home Renovation Savings program offers up to $7,500 for homes heated by electricity, oil or propane, and up to $2,000 for gas-heated homes. Pre-approval and a participating contractor are required.
What is a dual-fuel heating system?
A heat pump paired with a gas furnace. The heat pump heats in milder weather and cools in summer, and the furnace takes over on the coldest days.
Sources and references
- Ontario Energy Board electricity prices and Enbridge Gas rates, as compiled in our running cost guide, read October 30, 2026.
- Home Renovation Savings program, heat pump rebates, read October 30, 2026.
- Carrier Canada, "How much does a heat pump cost", read October 30, 2026.
- Carrier Canada, "How long do heat pumps last", read October 30, 2026.