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Comparing Energy Costs

Comparing Energy Costs

An Important Note About Energy Prices

Energy prices vary around the province and can change so you should always determine your current local rates to see if you should adjust the costs in the charts for your circumstances. The costs listed in the charts here are based on the following prices, which were valid as of January 2004, and include GST:

Natural Gas : 44 cents/cubic metre*
Electricity : 10.1 cents/kilowatt-hour*
Oil : 60 cents/litre
Propane : 63 cents/litre
Wood : $200/cord (one full cord = 4' x 4' x 8')**

* The natural gas price is composed of an estimated 23 cents for the gas itself (which you can purchase from the utility or any licensed marketer) and an estimated 18 cents for the delivery services provided by the utility - rates which are regulated by the Ontario Energy Board.

The electricity price of 10.1 cents/kWh includes an electricity commodity cost of 5.5 cents/kWh and estimated regulated costs of 4.0 cents/kWh + GST. This reflects announced charges effective April 1, 2004.

Both electricity and natural gas distributors have fixed monthly customer charges. The electricity price used for the charts does not incorporate this charge because you are most likely to be using electricity (and paying this charge) irrespective of what fuel you choose for heating and cooling. The natural gas price does incorporate this charge because you would likely not be a natural gas customer (and not incur this charge) if you do not use natural gas heating.

**For wood, the chart calculations are based on burning hardwood. Softwood is just as suitable for use as a fuel, but keep in mind that it takes about one and two-thirds cords of softwood to equal the energy content of one cord of hardwood.


Before You Start

Remember to first consider making improvements to the shell of your house (caulking, weatherstripping, insulation, etc.). These measures can make your home more comfortable while reducing your energy costs, and you can do many of these tasks yourself. Energy costs and savings are highly variable because of the range of conditions, extent of improvements and the costs of the fuel used. For example, the summer of 2002 was twice as hot, in terms of air conditioning load, as a "normal" or average summer. This would cause 2002 air conditioning energy consumption to be double the average on which the tables are based.

If you are building a new home, remember that an R-2000 certified house assures energy-efficient design and construction with built-in comfort. Every R-2000-certified house undergoes specific R-2000 Program-prescribed tests of certain efficiency and comfort-related components (after the components are installed).

Many of the options you are going to have to consider will involve weighing higher initial costs against lower energy consumption and cost, regardless of the specific energy source involved. If the choice is not clear for your circumstances, remember that energy costs are likely to rise over time, just like other costs, so the annual energy cost savings provided by the more efficient option are also likely to rise.

An Important Note About Installed Costs

While an attempt is made to give some notion of the installed cost of the various options, each situation is unique and installation costs can vary considerably. Your decisions should be based on several quotes for the work you are considering.

Also, the costs in the charts include an allowance for any typically-required fuel lines or tanks and connections to an existing distribution system, but do NOT include the cost of the actual distribution system, as these too can vary widely depending on the size of the house and the amount of work required.You should obtain several quotations from different suppliers or contractors for each option you are considering; be sure the quotes include pricing for installation. The quoted wood costs in the charts are for a decorative stove and a factory-built chimney. Efficient fireplace costs are higher.

Maintenance Costs

Maintenance needs and costs can vary significantly amongst the options you are considering and also can vary from one equipment supplier or fuel supplier to the next. When you get your quotes, also ask for quotes on standard maintenance packages and any extended warranty plans that are available. Consider these costs in arriving at a total annual operating cost.

Efficiency Ratings Used for Calculating the Charts

In most cases, the efficiency level used in calculating the charts is representative of the published ratings that are described in Chapter 12, Efficiency Ratings.

The published ratings cannot be used so directly in the case of earth energy systems because the field conditions for those systems operating in Ontario usually differ significantly from the fixed conditions used to establish the ratings. This, in turn, causes the average field operating efficiency for that equipment to differ significantly from the published ratings. The 2.8 COP (Coefficient of Performance) used for earth energy systems in the charts is based on estimates of average seasonal operating efficiencies for these systems in Ontario homes.

Fan Energy

The methods used to determine the AFUE (Annual Fuel Utilization Efficiency) of fossil-fuelled equipment do not consider the electricity used by that equipment. This component is quite significant, so in the charts it is assumed that 900 kWh of electricity per year is used by that equipment. Models with much more efficient direct current variable speed motors – which use much less electricity – are available.

Step 1: Start Here

You can use the charts in two ways to help you make the most cost-effective decisions possible when you upgrade or replace equipment or switch to another fuel:

1. You can find approximate costs by looking in the row of figures that relates to your house type. See Method 1: Approximate Costs as follows.
2. If you are able to determine your annual heating cost, you can use the charts to find a more accurate, comparative cost. Locate the figure that most closely matches your cost for your type of equipment, and then use that row to view an energy cost comparison. See Method 2 as follows.


Choose the option which most closely resembles your property. (Square footage does not include the basement.)

Smaller house: Town or row house, inside unit, 1,000 square feet
Average house: Semi-detached or detached, 1,200 square feet
Larger house: Detached/older house, 1,500 - 2,000 square feet

A Word About... Calculations

Even though the costs you determine using Method 2 are more accurate than the costs you can find through Method 1, they are estimates only. That's because the charts are based on typical equipment efficiencies and approximate fuel rates at the time of printing. For greater accuracy, you should always confirm the efficiency of the equipment you are considering and the fuel rates charged by your supplier. Then you can fine-tune the annual energy costs in the charts to your own circumstances.

1. Annual Heating Costs for Older Systems (in $)
House Type Electric Resistance 100% Efficiency Natural Gas Furnace/Boiler 63% AFUE Oil
Furnace/Boiler 63% AFUE
Furnace/Boiler 63% AFUE
Smaller $1,140 $810 $1,190 $1,500
Average $2,280 $1,510 $2,280 $2,890
Larger $3,410 $2,220 $3,360 $4,290

For an explanation of Efficiency and AFUE, see Chart 2, and read Chapter 12: Efficiency Ratings, in the Guide.

2. Annual Heating Costs for Newer Systems
House Type Electric Resistance 100% Efficiency All Electric Heat Pump 6.0 HSPF Earth Energy System 2.8 COP Natural Gas Furnace / Boiler 80% AFUE Natural Gas Furnace / Boiler 93% AFUE
Smaller $1,140 $650 $410 $660 $580
Average $2,280 $1,300 $810 $1,210 $1,060
Larger $3,410 $1,950 $1,220 $1,770 $1,540
Installed Cost
(Range in $)
$2,200-$2,700 $4,500-6,000 $6,000-12,000 $1,600-2700



House Type Oil
Furnace / Boiler 83% AFUE
Furnace / Boiler 80% AFUE
Furnace / Boiler 93% AFUE
Wood Stove (Conventional) 50% Efficiency Wood Stove (Advanced) 70% Efficiency
Smaller $960 $1,200 $1,050 $560 $430
Average $1,810 $2,300 $1,990 $1,020 $760
Larger $2,660 $3,400 $2,940 $1,480 $1,090
Installed Cost
(Range in $)



$2,400-2,800 $2,600-3,000

COP: Coefficient of Performance AFUE: Annual Fuel Utilization Efficiency HSPF: Heating Season Performance Factor. For a more detailed explantaion of these terms, please see Chapter 12, Efficiency Ratings.


To use the charts with Method 1:

Using the row of figures for your house type, you can compare typical annual energy costs for a number of equipment options with the typical energy cost for your present equipment.

You can see, though, that this method can only give you approximate costs. Your annual heating bill might be higher or lower than the average given, and this will affect the amount of savings you can expect from new equipment. The level of insulation, caulking and weatherstripping in your home, as well as your lifestyle, all affect the bottom line.

Before you make any decisions, you need to determine the answers to the questions listed below in Step 2.

An example for Method 1 can be found in Step 3 on this page


For this method you must estimate your current annual heating costs. If you haven't kept your bills, call your fuel supplier for the information. Your bill most likely combines both space heating and hot water costs; to discover your true heating bill for the year, you must deduct your hot water costs.

If you have a gas or an oil furnace and water heater, use Chart 4 to find approximately how much money your family spends in a year on hot water, then deduct this from your total annual gas or oil bill to find your home heating energy cost.

If you have electric heat, your bill also includes lighting and appliance costs. Assume that 60 per cent of your annual electricity bill is for home heating.

To use the charts with Method 2:

Using the column for your current heating system in Chart 1 or 2, find the figure that comes closest to your annual heating cost. It might be in a row that relates to a different House Type than your home, but this row will be the most accurate for your house and lifestyle and this will be the row you use.

Now, using Chart 2 and remaining in the appropriate row, look across that row to see the operating costs of new equipment, which you will adjust as described in Step 3.

Don't forget to review the questions in Step 2: Ask Yourself... before you make any decisions.

An example for Method 2 can be found in Step 3 on this page.

Step 2: Ask Yourself...

  • Am I interested in heating only, or do I want to check out heating and cooling options?
  • What fuels are available in my area? (There's no point in checking out, for example, natural gas costs if your property is located in a remote area where natural gas is not available.)
  • I'm renovating. What limits does my present heating system place on my choices? (For example, if there is no ductwork you would need to decide if it is practical or worthwhile to put in ductwork for forced-air heating.)
  • I'm having a home built. Am I aware of all the options my builder can offer? Are there options I am interested in, such as heat pumps or ductless air conditioning, that I should explore?
  • Do I plan to live in this home long enough to make this investment worthwhile to me?
  • How will I finance new equipment and installation?

Once you have considered these questions, you're ready to move on to Step 3: Determine Your Options

3. Cooling Costs for Newer Systems
House Type Central Air Conditioner
All-Electric Heat Pump
Earth Energy System
11.5 SEER
Smaller $60 $60 $50
Average $110 $110 $100
Larger $170 $170 $150
Installed Cost
(Range in $)
$1,600-3,000 $4,000-6,000 $6,000-$12,000

This chart shows an average cost during an average season (excluding untypical, i.e.. extremely hot or humid conditions).

SEER: Seasonal Energy Efficiency Ratio EER: Energy Efficiency Ratio. For an explanation of SEER and EER, please see the Cooling Equipment section of Chapter 12.

4. Annual Water Heating Costs
# of People in Household Earth Energy System
2.8 COP
0.89 Energy Factor
Natural Gas
0.57 Energy Factor
0.57 Energy Factor
0.57 Energy Factor
Solar with Electric Backup
One $100 $330 $200 $320 $400 $130
Two $140 $440 $270 $420 $530 $180
Three $190 $580 $360 $570 $700 $230
Four $220 $690 $420 $670 $840 $280
Six $290 $910 $560 $880 $1,100 $370
Installed Cost (Range) $300-500
(add-on to EES)
$300-400 $400-600 $600-900 $500-700
(not incl. fuel tank)
Monthly Rental *not avail. $4-14 $8-20 $9-15 $4-15 *not avail.

* "not available" means the equipment is not commercially available as a rental.

EF: Energy Factor. COP Coefficient of Performance. For a fuller explanation of these terms, please see the Hot Water Equipment section of Chapter 12.

A Word About... Saving Money

What if your heating bill is higher than you think it should be?

Perhaps you're spending more money on energy because your home isn't as energy-efficient as you can make it, or you're not practicing energy efficiency in your lifestyle.

Without changes in those areas, your energy bill will always be higher than it needs to be even if you install new, more efficient heating equipment. Perhaps it's time to start thinking the energy-wise way!

Step 3: Determine Your Options

Following are two examples that use the charts to calculate costs and identify options. All calculations are rounded to nearest $10.


This two-person household lives in a 1,700-square-foot detached home that was built in the 1950s. It has a natural gas furnace and water heater. The furnace is old and needs to be replaced. The householders have determined that they have a number of alternatives for replacing the furnace. They have decided that they will not install central air conditioning.

Using Method 1, the householders determine that their home fits the category listed as "Larger house."

They decide to use Chart 1, Annual Heating Costs for Older Systems, to find out what the annual heating energy bill should be for their type of home when it's heated by an older natural gas furnace. Looking down the column for Natural Gas Furnace or Boiler, 63% AFUE, the cost is estimated at $2,220 per year.

Next, they look at Chart 2, Annual Heating Costs for Newer Systems, to compare annual costs of several new heating options. Looking across the row of figures for the same category (Larger House) they see that the column for Natural Gas Furnace or Boiler with 93% AFUE will cost about $1,540 per year to operate, while a Natural Gas Furnace or Boiler with 80% AFUE will cost a little more at $1,770.

A Wood Stove, Advanced, with 70% Efficiency, would be cheaper, at $1,090. But, they have no space for wood storage. An Earth Energy System with 2.8 COP is in the same range at $1,220, according to the chart, but they check the bottom row for "Installed Cost" and are aware that installation cost is high.

So Household X decides not to switch to another fuel. They decide to go with replacing the existing gas furnace with another, and with no changes to the gas piping. They decide to get quotes for mid-efficiency and high-efficiency gas furnaces, plus the cost of installation, to see how the two actual installed costs compare.

NOTE: Chart 1 shows examples of installation costs, but these vary widely. The examples on the chart are approximations only and are included to give you an idea of the differences in installation costs for the range of heating options. ALWAYS get quotes from at least three contractors/suppliers so you can compare price, service and warranties.


Household Y is a family of two adults and two children. They live northwest of Ottawa and have a 2,500-square-foot, two-storey detached house built in 1980. It has electric baseboard heat and an electric water heater. The householders want to see if energy costs can be reduced by using a different heating system. After reading this guide, the householders realize that switching to another fuel would require the installation of a distribution system (such as ductwork or radiators). And, they know that natural gas is not an option because it's not available in the area.

Their neighbours heat their home with wood at no cost for the wood because they own a woodlot, but Household Y decides that wood heating is not practical for their lifestyle. They also decide they won't install central air conditioning.

They decide to investigate two of the remaining options - propane and oil - as fuels, and forced air (ductwork) and hot water (radiators) as possible distribution systems.

They decide to use Method 2 for their calculations. For Method 2: More Accurate Costs, they look up their electricity bill for the past year, which totaled $5,280. Figure that 60 per cent of that cost is to provide heat, so the cost to heat their home is $3,170 ($5,280 x 60%).

Using the cost of $3,170 as the reference point, they look for that number in Chart 2, Annual Heating Costs for Older Systems. They find that their cost to heat with electricity is 7 per cent below the price listed in the chart for a Larger house ($3,410).

Next, they review Chart 2, Annual Heating Costs for Newer Systems, and look in the columns for the cost of four types of heating: Oil Furnace or Boiler 83% AFUE, Propane Furnace or Boiler 80% AFUE, Propane Furnace or Boiler 93% AFUE and Earth Energy System 2.8 COP. They check across the row for Larger house, and adjust appropriately.

Here's how the numbers work out for Household Y:

Heating System Average Cost
Oil Furnace/Boiler, 83% AFUE $2,660 - 7% = $2,470
Propane Furnace/Boiler,
80% AFUE (mid efficiency):
$3,400 - 7% = $3,160
Propane Furnace/Boiler,
93% AFUE (high efficiency):
$2,940 - 7% = $2,730
Earth Energy System 2.8 COP: $1,220 - 7% = $1,130

From this it appears that an earth energy system is the least expensive. But, what about installation costs? The householders find that this heating option, in their circumstances and among the four options they are exploring, is the most costly to install.

Because the installation of a distribution system can be highly variable, the householders decide to get firm quotations - including installation - for these possibilities:

  • an oil furnace with duct work
  • an oil boiler with water pipes and radiators
  • an earth energy system with duct work.

They're careful to specify that they want the interior completely refinished where required after installation of the distribution system. They also specify that in the case of the earth energy system, the installation must comply with the CSA installation standard, and landscape repairs must be included in the cost.

The people in Household Y notice in Chart 4 that they could save money on water heating costs either by adding a solar system to their electric tank, switching to oil, or heating their water with an earth energy system. They decide to get prices for these options too.

With actual installed costs to weigh against the annual energy costs of the various options, the householders can then make a final choice for this important purchase.

© 2005 Queen's Printer for Ontario

This information is provided as a public service, but we cannot guarantee that the information is current or accurate.
Readers should verify the information before acting on it.

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