New oil furnace + new AC
- Installed
- $15,300$10,400–$18,800
- Energy per year
- $3,900Baseline
- 15-year total
- $73,800
- Payback
- Baseline
Heat pump or new furnace and AC? For Alaska Power and Telephone Co customers
For Alaska Power and Telephone Co customers in Alaska, on the utility's average price, local weather.
Quick answer · updated
As of November 2026, for a typical 1,800 sq ft heating oil-heated home on Alaska Power and Telephone Co electricity rates in Alaska that needs a new furnace and AC: A high-efficiency cold-climate heat pump comes out ahead here even with a high quote: about $27,100 less than a new furnace and AC over 15 years at typical prices, and $1,920 a year less to run.
Electricity
37.2¢/kWh
+37% vs. Alaska average
Heating fuel
$6.15/gallon
Heating oil: 47% of homes here
Climate
7,564
heating degree days · Thorne Bay
Rebates
Not checked
not yet researched in Alaska
Our estimate for this home
A high-efficiency cold-climate heat pump comes out ahead
A high-efficiency cold-climate heat pump comes out ahead here even with a high quote: about $27,100 less than a new furnace and AC over 15 years at typical prices, and $1,920 a year less to run.
Total cost over 15 years
Installed cost plus energy, year by year. Hover or tap the chart to compare.
- New oil furnace + new AC
- Heat pump (replaces both)
- High-efficiency cold-climate heat pump
Show as a table
| Option | Installed cost (typical, range, after rebates) | Energy cost per year | 15-year total | Payback vs. like-for-like |
|---|---|---|---|---|
| New oil furnace + new AC | $15,300 $10,400–$18,800 |
$3,900 |
$73,800 | Baseline |
| Heat pump (replaces both) | $13,100 $9,100–$17,000 |
$2,450 saves $1,450/yr |
$49,800 | Cheaper up front and to run |
| High-efficiency cold-climate heat pump Lowest 15-year cost | $17,000 $12,500–$22,700 |
$1,980 saves $1,920/yr |
$46,700 | 0.9 years |
What this is based on
- Electricity: Alaska Power and Telephone Co's average residential price in AK (EIA), $0.372/kWh; the winter price of extra kWh is estimated at $0.355/kWh. Enter your own rate for a closer answer.
- Weather: Thorne Bay (7,564 heating and 11 cooling degree days a year, 1991-2020).
- Heating fuel prices (EIA): gas $1.26/therm (Alaska, average of the last five winter months); propane $2.69/gallon (U.S. average this heating season); heating oil $6.15/gallon (U.S. average this heating season).
- Homes in Alaska Power and Telephone Co's Alaska area heat with heating oil 47%, electricity 28%, propane 4%, gas 2% (U.S. Census Bureau, American Community Survey 2019-2023). The calculator starts with heating oil, the most common furnace fuel here; pick yours above.
- Alaska HVAC installer wages are 27% above the U.S. median (BLS), so installed prices are scaled by 1.14.
- Energy use for heating and cooling:
- New oil furnace + new AC: 870 kWh and 583 gallons of heating oil a year for heating and cooling
- Heat pump (replaces both): 6,779 kWh a year for heating and cooling
- High-efficiency cold-climate heat pump: 5,485 kWh a year for heating and cooling
Rebates
- We haven't checked heat pump rebates in Alaska yet, so these numbers leave them out. Utility and state programs can take thousands off a heat pump: ask Alaska Power and Telephone Co and your contractor what's available. Each dollar of rebate adds a dollar to the quote gap a heat pump can carry.
How Alaska Power and Telephone Co's rates change the answer
Alaska Power and Telephone Co's electricity price for a typical home is 37% above the Alaska average ($0.372 vs. $0.271 per kWh). A heat pump moves your heating from gas, propane or oil to electricity, so the electricity price is the biggest single factor: calculators that use a state average can get the answer wrong for your utility. At these prices, a heat pump is cheaper to run than heating oil heat for a typical home here.
Common questions
Is a heat pump worth it for Alaska Power and Telephone Co customers?
A high-efficiency cold-climate heat pump comes out ahead here even with a high quote: about $27,100 less than a new furnace and AC over 15 years at typical prices, and $1,920 a year less to run. This is for a typical 1,800 sq ft home with average insulation that heats with heating oil and needs both a new furnace and AC; change the details in the calculator above for your home.
How much does a heat pump cost to run on Alaska Power and Telephone Co's rates?
About $1,980 a year for heating and cooling with a high-efficiency cold-climate heat pump (5,485 kWh), compared with about $3,900 a year for a new furnace and AC, for a typical 1,800 sq ft home with weather like Thorne Bay's.
How much does a heat pump cost to install in Alaska?
Our typical installed price for a high-efficiency cold-climate heat pump in Alaska is about $17,025 (range $12,485 to $22,700), against about $15,323 for a new furnace and AC. Prices are published study ranges scaled for home size and Alaska installer wages; rebates in Alaska have not been checked yet, so they are not included. Always compare real quotes.
What electricity price does this use?
Electricity: Alaska Power and Telephone Co's average residential price in AK (EIA), $0.372/kWh; the winter price of extra kWh is estimated at $0.355/kWh. Enter your own rate for a closer answer.
How we calculate this
Heating and cooling need
Your home's yearly heating and cooling need comes from 1991-2020 NOAA climate normals for the nearest weather station, scaled by floor area and insulation level. If you know last winter's gas use, compare it with the therms in the energy-use list above.
Heating fuels
Choose the fuel your furnace burns: gas, propane, heating oil or electricity. Gas uses the state's average residential price over the last five winter months; propane and heating oil use the U.S. Energy Information Administration's weekly residential prices for this heating season (state, regional or U.S. average, as available), converted by heat content (91,500 Btu per gallon of propane, 138,500 per gallon of oil). An electric furnace is priced through the same electricity rates as the heat pump. The starting fuel is the most common furnace fuel in the utility's area (U.S. Census Bureau, American Community Survey).
Equipment efficiency
New gas or propane furnace 95% AFUE, new oil furnace 85%, electric furnace 100%; new AC SEER2 13.4; standard heat pump SEER2 15.2 / HSPF2 7.8; high-efficiency cold-climate heat pump SEER2 21.5 / HSPF2 10.6. Heat pump efficiency falls as it gets colder, and in cold months part of the heat comes from backup electric strips (or your old furnace, if you keep it). Existing equipment is assumed to be 15-20 years old: an 80% gas or propane furnace, a 78% oil furnace or a SEER2 9.5 AC.
Installed costs
Installed prices vary a lot, so we show a typical price and a range for a home of about 1,800 sq ft with existing ductwork, scaled for larger or smaller homes: furnace and AC together $9,000–$14,000; furnace alone $3,800–$7,000; AC alone $4,500–$9,000; standard heat pump $8,000–$15,000; high-efficiency cold-climate heat pump $11,000–$20,000; electrical panel upgrade, if needed, $1,500–$4,000. These are national figures drawn from published studies and program data (NESCAUM / Energy Solutions, Heat Pumps in the Northeast and Mid-Atlantic: Costs and Market Trends (October 2024); Rewiring America, Upfront cost of home electrification (March 2024); EIA, Updated Buildings Sector Appliance and Equipment Costs and Efficiencies (2023)). The most useful number here is how much more a heat pump can cost than a like-for-like quote and still come out ahead: get quotes for both and compare.
Labor and rebates
Half of each installed price is treated as labor and scaled by the state's median HVAC installer wage relative to the U.S. median (U.S. Bureau of Labor Statistics). Listed rebates are subtracted when the box is ticked; per-ton rebates assume about one ton of capacity per 600 sq ft. Rebates change often and have eligibility rules, so confirm with the program before you buy.
Not included
Financing, maintenance (similar for all options), local town rebates, and changes in energy prices over time.