Heat with electricity? Your utility may have a cheaper rate for it

A home heated by electricity uses far more power in winter than one heated by gas or oil, and it uses it in exactly the months when the bill is already highest. Some utilities file a separate residential tariff for these homes, usually called residential heating service, space heating or all-electric service, and it is usually cheaper in winter. It is easy to miss, because it is usually a separate tariff you have to ask for.

How many utilities offer one

Of the 174 utilities whose current residential tariffs we track, 25 file a rate for electrically heated homes. They include PECO and Duquesne Light in Pennsylvania, Public Service Electric & Gas and Jersey Central Power & Light in New Jersey, Connecticut Light & Power, DTE Electric in Michigan, Commonwealth Edison in Illinois, Northern States Power (Xcel Energy) in Minnesota, NorthWestern Energy in South Dakota, Southwestern Public Service in New Mexico and Texas, CPS Energy in San Antonio, Duke Energy Carolinas, Pacific Gas & Electric, and several electric cooperatives in North Carolina.

Other utilities build the discount into their standard rate instead, with a winter block that gets cheaper as usage climbs. Does each extra kWh cost more? shows where that is common.

What it saves

22 of the 25 also file a standard rate open to any household, so the two can be compared directly. We priced a January bill for a home using 2,000 kWh, a level an electrically heated home can reach in a cold month, on the heating rate and on the cheapest other tariff the same household could take:

• At 16 of the 22 utilities, the heating rate costs less.
• The typical saving is $27 on that January bill.
• At lower usage the gap shrinks: at 1,000 kWh, the typical January saving is $8.

At the other six it is no cheaper in January: at two the price is the same, and at four another tariff costs less.

In summer, the heating rate rarely costs more. At 1,000 kWh in July it was dearer at only 3 of the 22 utilities, and the same or cheaper at the rest.

Who qualifies

Each tariff sets its own conditions, so read the filing or ask the utility. Common ones are that electricity is the home's main source of heat, that the heating equipment is permanently installed, or that it is a heat pump. Some require the heating to be on a separate meter.

If you are replacing a gas furnace with a heat pump, ask before the installer leaves. A rate built for electric heat can change the running cost noticeably, and you may have to ask to be moved onto it.

How we measured this

• Current tariffs: filed since 2020, priceable from usage alone, priced as a whole home's bill, and not flagged as a likely data error, the same set this site ranks.
• Heating rates: found by name ("heating", "space heat", "all-electric", "heat pump"). This is done by name, so it is imperfect.
• The comparison: the cheapest heating rate at each utility against the cheapest of its other tariffs open to any household, leaving out those restricted to electric vehicles, solar, pilots and similar programs. Bills include fixed charges and use this site's modeled daily usage pattern, which matters for the time-of-use options.
• Counted by utility: Pacific Gas & Electric files its all-electric option once for each climate region; it counts once here.

What to do with this

Open the calculator, choose your utility and enter a winter month's usage from your bill. It prices every current tariff your utility files, the heating rate included where there is one, so you can see what switching would save before you ask.