Dual Fuel vs Electric heat

Nick

Sep 19, 2025 • 5 min read

A common argument online is that heating with electricity is expensive and the better option is almost always combining a heat pump with a natural gas furnace, I would like to argue that this is not the case and that duel fuel is actually the worst option available for a wide variety of homeowners.

Understanding the Systems

Heat pumps work by moving heat from outside to inside your home (or vice versa for cooling). They're incredibly efficient, often providing 2-4 units of heat for every unit of electricity consumed. Natural gas furnaces, on the other hand, burn gas to create heat, typically operating at around 95% efficiency for modern units. A dual fuel system combines these, supposedly allowing you to use the most cost-effective option at any given time. But here's where things get interesting...

Ontario Energy Landscape

In Ontario, we've got a unique energy situation:

Electricity rates: ~$0.10/kwh (these differ based on TOU or tiered rates)
Natural gas rates (Enbridge): ~$0.45 cm3 = $0.042/kwh
Enbridge customer charge: $25.72 + HST = $29/month

Cost Analysis

Here's where the rubber meets the road. Based on the above numbers it seems like you save $0.06/kwh when comparing the costs of these 2 energy sources but the end goal is to get heat not raw energy, this means we need to consider the efficiency of the equipment at converting that input into heat:

Baseboard heating: If we compare a 100% efficient baseboard heating vs a 96% efficient natural gas furnace you would be saving $0.06/kwh so it would require consuming at least 5144 kwh / 487 cubic meters / 172 therms of natural gas to break even on the fixed costs of the Enbridge connection. For most homes this would be easily reached but if you have a small townhome that is particularly well insulated you could be close to this number such that baseboard heaters would actually be cheaper when you consider the maintenance cost of the equipment. This is why many townhomes choose to use basboard heating, its actually the cheaper option! (I say this as a person who rented a townhome with baseboard heaters and what felt like crazy expensive bills)

Heatpump + electric backup: Heatpumps just move energy so they can exceed 100% efficiency. I built a calculator that uses your homes heating load and the weather data for your city to provide a average COP. Given the energy costs above it means that as long as your average COP is 2.5 or higher then your consumption cost will be cheaper with a heatpump compared to natural gas, anecdotally my 1960's bungalow in Ottawa with the cheapest ccASHP I got quotes averages a COP of 2.58 so I save the $308/year in customer charges to Enbridge

Heatpump + natural gas backup (dual fuel): On paper, this sounds like the “best of both worlds,” but here’s the kicker—because of Enbridge’s pesky fixed fee you need a lot of natural gas consumption before it makes sense.

If at coldest temperatures your heat pump only achieves a COP of 1.5 (150% efficient), natural gas does become cheaper per unit of heat. But the savings are modest—maybe 2.5 cents per kWh of heat. That doesn’t sound too bad until you factor in the $308 per year fixed Enbridge fee. To break even on that you would need to consume **1200 cubic meters (≈12,000 kWh)** of natural gas annually. For context, that’s the equivalent of all the space heating needs in a large, drafty house… not a modest, well‑insulated home.

This means a dual fuel setup only makes financial sense if you’re burning thousands of cubic meters anyway—for example if you also run a pool heater, sauna, natural gas water heater(s), or are cooking heavily on a gas stove. In other words: unless you already have high non‑space‑heating gas loads, the “savings” from switching back and forth are almost fully erased by the Enbridge customer charge.

My real‑world case study

For my moderately insulated 1960’s Ottawa bungalow with the cheapest cold‑climate ASHP I could get quotes on, the average COP was 2.58 (≈258% efficiency). In practice this means:

75% of the season → Heat pump cheaper than natural gas
25% of the season (the really cold days) → Gas would have been cheaper

so on paper that’s where natural gas could theoretically save me money. Instead, by ditching Enbridge entirely, I guarantee that I save $308 fee every single year, which tips the balance back toward the heat pump plus electric backup being either the same cost—or outright cheaper—than dual fuel.

And that’s before we factor in emissions…

Environmental Considerations

Ontario’s grid is one of the cleanest in North America thanks to hydro and nuclear. On average, our electricity is 30–40 g CO₂ per kWh. Compare that to natural gas, which emits 180–200 g CO₂ per kWh of heat when burned in a furnace.

So even when natural gas is slightly cheaper on a cents‑per‑kWh basis, the carbon math just doesn’t add up. If you value reducing your footprint—or anticipate future carbon pricing increasing the cost of gas—the scales tilt even harder toward electricity.

Long-Term Financial Impact

Up‑front equipment costs matter, but so do the ongoing nickels and dimes that slowly snowball over years:

Heat pump only: $12K–$18K upfront (less with rebates), no Enbridge bill, only one system to maintain.
Dual fuel: $15K–$20K plus ~$308 in fixed charges each year just to stay connected.

Here’s the key point:
👉 The big lever isn’t the per‑kWh difference between electricity and gas, it’s whether or not you’re paying that fixed Enbridge fee. Arbitraging between a 2.2 COP on a heat pump and a 96% furnace efficiency might save a couple cents per kWh of delivered heat… but those savings typically add up to tens of dollars per season, not hundreds. Meanwhile, the fixed charge is $308 automatic, every year, whether you burn 1 cubic metre of gas or 1,000.

That means dual fuel may still make sense if you’re already a heavy gas user (hot water, cooking, pool/spa, etc.), but if your only natural gas use is space heating, you’ll likely spend more time thinking about whether you “flipped it at the right COP” than you’ll ever see back in real dollars.

Conclusion

So is dual fuel “bad”? Not exactly. For large homes with big heating loads, or households already using lots of gas elsewhere, the Enbridge connection is basically paid for and dual fuel may reduce some of the highest‑demand days.

But for many Ontario homeowners, here’s the reality check:

The arbitrage savings from switching back and forth between a heat pump and a furnace are usually small (think tens of dollars a year).
The fixed gas connection fee is what really tips the scale, and you only avoid it if you go all‑electric.
Over the long run, the difference between setups isn’t who “picked the cheapest fuel each day,” it’s who eliminated the recurring $308.

In other words: the arbitrage conversation gets a lot of attention online but is often a distraction. The bigger financial decision is whether or not maintaining a gas connection makes sense for your household.