New gas furnace + new AC
Lowest 15-year cost
- Installed
- $11,500$9,000–$14,000
- Energy per year
- $1,060Baseline
- 15-year total
- $27,400
- Payback
- Baseline
Heat pump or new furnace and AC? For Xcel Energy (Northern States Power Wisconsin) customers
For Xcel Energy (Northern States Power Wisconsin) customers in Michigan, on the utility's current tariff, local weather.
Quick answer · updated
As of November 2026, for a typical 1,800 sq ft gas-heated home on Xcel Energy (Northern States Power Wisconsin) electricity rates in Michigan that needs a new furnace and AC: It depends on your quotes. A high-efficiency cold-climate heat pump costs about $30 a year more to run, so it only comes out ahead if its quote is at least $400 below the quote for a new furnace and AC.
Electricity
15.6¢/kWh
-27% vs. Michigan average
Heating fuel
$1.03/therm
Gas: 58% of homes here
Climate
9,136
heating degree days · Ironwood #2
Rebates
Not checked
not yet researched in Michigan
Our estimate for this home
It depends on your quotes
It depends on your quotes. A high-efficiency cold-climate heat pump costs about $30 a year more to run, so it only comes out ahead if its quote is at least $400 below the quote for a new furnace and AC.
Total cost over 15 years
Installed cost plus energy, year by year. Hover or tap the chart to compare.
- New gas 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 gas furnace + new AC Lowest 15-year cost | $11,500 $9,000–$14,000 |
$1,060 |
$27,400 | Baseline |
| Heat pump (replaces both) | $11,500 $8,000–$15,000 |
$1,720 costs $660/yr |
$37,300 | Same price up front, costs more to run |
| High-efficiency cold-climate heat pump | $15,000 $11,000–$20,000 |
$1,090 costs $30/yr |
$31,300 | Never pays back |
What this is based on
- Electricity: Rg-1 Residential Service Single Phase tariff for Xcel Energy (Northern States Power Wisconsin), effective 2024-01-01, from the U.S. Utility Rate Database, applied tier by tier to the extra kWh.
- Weather: Ironwood #2 (9,136 heating and 126 cooling degree days a year, 1991-2020).
- Heating fuel prices (EIA): gas $1.03/therm (Michigan, average of the last five winter months); propane $2.43/gallon (Michigan average this heating season); heating oil $5.93/gallon (Michigan average this heating season).
- Homes in Xcel Energy (Northern States Power Wisconsin)'s Michigan area heat with gas 58%, propane 22%, electricity 7%, heating oil 4% (U.S. Census Bureau, American Community Survey 2019-2023). The calculator starts with gas, the most common furnace fuel here; pick yours above.
- Michigan HVAC installer wages are 0% above the U.S. median (BLS), so installed prices are scaled by 1.00.
- Energy use for heating and cooling:
- New gas furnace + new AC: 1,173 kWh and 872 therms a year for heating and cooling
- Heat pump (replaces both): 12,558 kWh a year for heating and cooling
- High-efficiency cold-climate heat pump: 7,934 kWh a year for heating and cooling
Rebates
- We haven't checked heat pump rebates in Michigan yet, so these numbers leave them out. Utility and state programs can take thousands off a heat pump: ask Xcel Energy (Northern States Power Wisconsin) and your contractor what's available. Each dollar of rebate adds a dollar to the quote gap a heat pump can carry.
How Xcel Energy (Northern States Power Wisconsin)'s rates change the answer
Xcel Energy (Northern States Power Wisconsin)'s electricity price for a typical home is 27% below the Michigan average ($0.156 vs. $0.212 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, gas heat is cheaper to run than a heat pump for a typical home here.
Common questions
Is a heat pump worth it for Xcel Energy (Northern States Power Wisconsin) customers?
It depends on your quotes. A high-efficiency cold-climate heat pump costs about $30 a year more to run, so it only comes out ahead if its quote is at least $400 below the quote for a new furnace and AC. This is for a typical 1,800 sq ft home with average insulation that heats with gas 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 Xcel Energy (Northern States Power Wisconsin)'s rates?
About $1,090 a year for heating and cooling with a high-efficiency cold-climate heat pump (7,934 kWh), compared with about $1,060 a year for a new furnace and AC, for a typical 1,800 sq ft home with weather like Ironwood #2's.
How much does a heat pump cost to install in Michigan?
Our typical installed price for a high-efficiency cold-climate heat pump in Michigan is about $14,985 (range $10,989 to $19,980), against about $11,489 for a new furnace and AC. Prices are published study ranges scaled for home size and Michigan installer wages; rebates in Michigan have not been checked yet, so they are not included. Always compare real quotes.
What electricity price does this use?
Electricity: Rg-1 Residential Service Single Phase tariff for Xcel Energy (Northern States Power Wisconsin), effective 2024-01-01, from the U.S. Utility Rate Database, applied tier by tier to the extra kWh.
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.