By Mario Vaghei, General Manager, Aire One Peel Heating & Cooling · Published November 11, 2026 · Facts verified November 10, 2026
Short answer
It depends on the fuel already in your house. If you heat with natural gas, the cheapest heat in Ontario at the November 2026 prices is still the gas furnace at about 2.9 cents per kWh of heat, and the cheapest cooling is a right-sized central air conditioner or heat pump run at 24 to 25 degrees with a clean filter and coil. If you heat with electric baseboards, an electric furnace, oil or propane, the cheapest path is a cold-climate heat pump, which cuts heating cost by half to two thirds and earns the largest rebate. Only one gas household beats the furnace outright: one on the Ultra-Low Overnight plan that can pre-heat the house at 3.7 cents overnight.
On this page
Start with what you heat with today · Why gas still wins for most gas-heated homes · Why a heat pump wins everywhere else · The cheapest cooling: size, setting, upkeep · What does not make heating or cooling cheaper · When to call us · Frequently asked questions
Start with what you heat with today
Natural Resources Canada puts it plainly: a heat pump's savings "range from a low of about 20 percent, where gas is the primary heat source", up to 60 per cent where the house is heated with electricity. The fuel you have now sets the answer, so the table is organized that way.
| You heat with | Cheapest heating | Cheapest cooling | Why |
|---|---|---|---|
| Natural gas furnace | Keep the furnace: about 2.9 cents per kWh of heat | A right-sized high-SEER air conditioner, or the cooling side of a heat pump you buy for other reasons | A heat pump delivers heat at about 3.0 cents on off-peak power in mild weather and 4.5 to 6.5 cents in deep cold or at peak hours |
| Natural gas, on the Ultra-Low Overnight plan | A cold-climate heat pump that pre-heats overnight at 3.7 cents, with the furnace as backup | The same heat pump | A heat pump needs a COP of only 1.28 to match gas on ULO power, against 3.16 on off-peak Time-of-Use |
| Electric baseboards or electric furnace | A cold-climate heat pump | The same heat pump | Resistance heat costs 9.1 to 18.9 cents per kWh because its COP is 1; a heat pump cuts that by half to two thirds |
| Oil or propane | A cold-climate heat pump | The same heat pump | Delivered fuels cost well above natural gas per unit of heat, and the rebate treats these homes like electric ones |
Table: cents-per-kWh figures from our heat pump vs furnace running-cost guide, at the Ontario Energy Board Regulated Price Plan prices in effect from November 1, 2026 (off-peak 9.1, mid-peak 14.6, on-peak 18.9 cents per kWh; Ultra-Low Overnight 3.7 cents overnight), re-checked on oeb.ca November 10, 2026, and the Enbridge EGD rate of October 1, 2026.
Why gas still wins for most gas-heated homes
The federal carbon charge came off Ontario gas bills on April 1, 2025, and that single change made a 95 per cent gas furnace the cheapest heat for most gas-heated homes. Canada.ca says a cold-climate air-source heat pump "Heats space up to 3.5 times more efficiently than a gas furnace", and that is true as an efficiency statement, but efficiency is not price: electricity at 9.1 to 18.9 cents per kWh divided by a winter-average COP lands near or above gas at today's rates. The full arithmetic, month by month for a Mississauga house, is in the running-cost guide above. If you are choosing a whole system rather than a fuel, our comparison of furnaces, heat pumps, dual fuel and boilers covers that.
Why a heat pump wins everywhere else
For electric, oil and propane homes the heat pump is not close. Resistance heat has a COP of 1, so every kWh of heat costs the full electricity price. A cold-climate heat pump averages a COP between 1.5 and 3.0 across an Ontario winter, which is where the "half to two thirds" saving comes from. The Home Renovation Savings Program then pays $1,250 per ton up to $7,500 for a cold-climate air-source heat pump in a home heated with electricity, oil, propane or wood, against $500 per ton up to $2,000 for an Enbridge natural gas customer. Pre-approval is mandatory before the installation, and no home energy assessment is required for this rebate. Our rebates guide tracks the federal rebate expected in 2027 as well.
The cheapest cooling: size, setting, upkeep
Cooling is where most homes overspend, and none of the fixes cost much.
- Size it right. NRCan: "Do not rely on simple rules of thumb for sizing, but insist on a thorough analysis", and "Oversizing the unit will result in short operating cycles, which will not adequately remove humidity." An oversized unit costs more to buy and leaves the house clammy.
- Set it at 24 to 25 degrees. NRCan's range for central systems is "22–25°C", and "A setting at the higher end of the range will result in lower air-conditioning costs." For winter, our thermostat guide gives the heating side.
- Keep the filter and the outdoor coil clean. NRCan: "Filter and coil maintenance can have a dramatic impact on system performance and service life."
- Buy efficiency once. SEER is "a measurement of the cooling efficiency of the air conditioner over the entire cooling season"; a higher SEER unit costs more up front and less every summer after. The air conditioner installation cost guide shows what the SEER step costs in Mississauga.
What does not make heating or cooling cheaper
- Buying a bigger furnace or air conditioner "to be safe".
- Switching a gas home to a heat pump for savings alone at today's prices, unless you are on Ultra-Low Overnight or replacing the air conditioner anyway.
- Skipping the yearly service: NRCan notes a dirty burner or cracked heat exchanger makes the system "less safe and less efficient", and dirty coils make the air conditioner "work harder".
When to call us
For a load calculation and a quote on the system that fits your fuel, call 905-564-8545 or ask for a heat pump installation estimate.
Frequently asked questions
What is the cheapest way to heat a home in Ontario?
For a gas-heated home at the November 2026 prices, the gas furnace, at about 2.9 cents per kWh of heat. For a home heated with electricity, oil or propane, a cold-climate heat pump, which cuts heating cost by half to two thirds and qualifies for up to $7,500 under the Home Renovation Savings Program.
Is a heat pump cheaper to run than a gas furnace in Ontario?
Usually not at today's rates. A heat pump delivers heat at about 3.0 cents per kWh on off-peak power in mild weather and 4.5 to 6.5 cents in deep cold or at peak hours, against about 2.9 cents from a 95 per cent gas furnace. It wins on the Ultra-Low Overnight plan, where a COP of 1.28 is enough to match gas.
What is the cheapest way to cool a house?
A right-sized unit set at the warm end of NRCan's 22 to 25 degree range, with a clean filter and outdoor coil. Oversizing causes short cycles that fail to remove humidity, and a dirty coil makes the unit work harder.
Does the Ontario rebate make a heat pump the cheapest option?
For electric, oil and propane homes, yes: $1,250 per ton up to $7,500 on top of lower running cost. For an Enbridge gas customer the rebate is $500 per ton up to $2,000, and the running cost at today's prices is about equal to gas or higher.
Which electricity plan is cheapest for a heat pump?
Ultra-Low Overnight, at 3.7 cents per kWh from 11 p.m. to 7 a.m., if the house can pre-heat overnight and coast through the 4 to 9 p.m. on-peak block, which costs 37.7 cents on that plan.
Sources and references
- Ontario Energy Board, "Electricity rates" (prices from November 1, 2026), read November 10, 2026.
- Natural Resources Canada, "Air Conditioning Your Home", read November 10, 2026.
- Canada.ca, "Heat pump basics", read November 10, 2026.
- Home Renovation Savings Program, heat pump rebates, read November 10, 2026.
- Natural Resources Canada, "Guide to maintaining your home heating and cooling system", read November 10, 2026.