The short answer
On MLGW’s current rates, gas heats a Memphis house for less money per unit of heat than a heat pump does. A heat pump heats for far less than electric strips. That ordering decides most heating choices here.
Bluffline Memphis Heat Pumps works through this comparison with homeowners before every gas-house job, because it changes what we recommend.
The numbers per million BTU
Here is what one million BTU of heat delivered into the house costs, worked from MLGW’s published residential rates:
| Heat source | Cost per million BTU delivered |
|---|---|
| Gas in a 95 percent furnace | About $6.30 |
| Gas in an 80 percent furnace | About $7.50 |
| Heat pump on a mild winter day | About $10.20 |
| Heat pump on a cold winter day | About $14.30 |
| Electric resistance strips | About $35.80 |
| Gas in a spike month like February 2026 | About $12.20 |
Where the numbers come from
- Electricity: MLGW’s residential winter energy rate plus TVA’s fuel cost adjustment, about 12 cents per kilowatt-hour. One kilowatt-hour is 3,412 BTU.
- Gas: MLGW’s residential gas rate plus the monthly purchased gas adjustment, about 62 cents per hundred cubic feet in a typical month.
- Heat pump efficiency: a coefficient of performance around 3.5 on a mild day and 2.5 on a cold one. That ratio falls as the outdoor air gets colder.
Fixed monthly charges are left out, since you pay them whether you heat with gas or electricity, unless you close the gas account entirely.
Why gas wins most months
A heat pump is efficient: it moves two to four units of heat for every unit of electricity it uses.
But electricity on MLGW costs much more per unit of energy than gas does. To match gas, a heat pump would need a coefficient of performance near 5.7, and air-source heat pumps don’t reach that in winter.
Where the heat pump wins
- Against strips, by a wide margin, every day of the year.
- Against gas in a spike month, when the purchased gas adjustment pushes gas above the heat pump’s mild-day cost.
- Against an old 60 or 70 percent furnace with leaky venting, on mild days.
A worked winter
Take a house that needs 40 million BTU of heat over a Memphis winter, a reasonable figure for a moderately insulated 1,800 square foot home. The heating part of the bill, before fixed charges, works out like this:
| Heat source | Winter heating cost |
|---|---|
| Gas, 95 percent furnace | About $250 |
| Heat pump, mixed mild and cold days | About $460 |
| Electric strips alone | About $1,430 |
Reading the table
- Strips to heat pump saves close to $1,000 a winter in this example, which is why strip-heat houses are the clearest case for a heat pump.
- Gas to heat pump costs about $200 more a winter on typical MLGW gas prices, which is why we price dual fuel first in gas houses.
- A spike winter narrows the gas gap. If gas averaged February 2026’s level all season, gas and heat pump costs would be close.
Your house’s number depends on its size, insulation, ducts and how you set the thermostat. Twelve months of MLGW usage shows your real heating load.
What the bill comparison leaves out
Running cost per BTU isn’t the only thing that decides a heating system.
Equipment and replacement timing
If the AC is failing and the furnace is sound, a heat pump costs little more than an AC and gives you a second heat source. If the furnace is failing too, replacing both with one heat pump can cost less up front than a new furnace plus a new AC.
Comfort
Heat pump air leaves the registers in the 90s and runs longer; furnace air is hotter and comes in shorter bursts. Some people prefer one, some the other.
Safety and simplicity
A heat pump has no flame, no flue and no carbon monoxide risk. A gas furnace needs a sound heat exchanger and venting, checked over its life.
Outages
Both stop in a power outage. A gas furnace needs power for its blower, igniter and controls, though a small generator can run it. Strips need far more generator capacity. The ice storm guide covers both.
Three common Memphis cases
What the house has now decides which comparison matters:
| Your house now | Usual best fit | Why |
|---|---|---|
| Sound gas furnace, failing AC | Dual fuel | Gas stays cheap for cold days; the heat pump replaces the AC |
| Failing furnace and failing AC | Price both dual fuel with a new furnace and all-electric | Up-front cost and preference decide |
| Electric furnace with strips | All-electric heat pump | Biggest bill drop of any change |
The dual fuel page covers the first, the gas furnace to heat pump page the second, and electric furnace to heat pump the third.
Dual fuel: using whichever is cheaper
A dual fuel system pairs a heat pump with a gas furnace. An outdoor sensor tells the thermostat when to switch from the heat pump to gas. You choose that switchover temperature.
Setting it for today’s rates
On today’s MLGW rates gas is cheaper at any outdoor temperature, so a cost-first setting lets gas carry most of the winter.
A comfort-first setting runs the heat pump down to about 35 degrees for steadier mild-day heat at a small extra cost. When gas spikes, lowering the switchover lets the heat pump carry more. The switchover guide works through it.
What dual fuel needs from the furnace
The furnace’s blower has to move about 400 cubic feet of air per minute for each ton of heat pump, and the heat pump’s coil has to fit above or below it. The heat exchanger and flue have to pass inspection. A furnace that fails any of those changes the comparison to a new furnace or an all-electric system.
Outside MLGW territory
DeSoto County and Crittenden County homes are on different utilities, and the numbers change.
- Entergy Mississippi and West Memphis Utilities have their own electric rates.
- Gas suppliers in Olive Branch, Southaven and Arkansas price gas differently from MLGW.
- TVA’s heat pump rebate applies only on TVA power companies.
We run the comparison from your own bills. The Southaven and West Memphis pages cover the local details.
Rebates and the up-front side
On MLGW and other TVA power companies, TVA EnergyRight pays $500 for a qualifying heat pump at 15 SEER2 and $800 at 17 SEER2.
The heat pump has to be installed by a participating contractor in TVA’s Quality Contractor Network. The federal 25C tax credit ended for equipment placed in service after 2025. The TVA rebate guide has the details.
Typical installed ranges
Bluffline’s typical range for a dual fuel heat pump on a kept furnace is $5,000 to $10,000, and for a whole-home all-electric system $8,000 to $16,000. Your written estimate after the visit sets the price. The cost page covers every range.
How to decide
Start with the furnace. If it is sound, dual fuel is usually the better money on MLGW.
If it is failing, price both a new furnace with a heat pump and an all-electric system, and let up-front cost, comfort and how you feel about gas decide. The Memphis buying guide puts the whole decision in order.