Electricity versus gas heating costs

The pub argument is always the same. Someone quotes a gas usage rate in cents per megajoule. Someone else quotes an electricity rate in cents per kilowatt hour. They declare a winner. Nobody has mentioned the appliance.

Heating costs are the cost of useful heat in the room, after the heater’s efficiency, on the tariff you actually pay, including any daily supply you only keep because of that heater. A 2.4 kW bar radiator at 32c/kWh is a different machine from a reverse-cycle unit with a coefficient of performance of 3.5 on the same tariff. A 70 per cent efficient gas ducted system on 3c/MJ is a different machine from a 90 per cent efficient room heater on the same gas plan.

Australia still has plenty of both. Victoria and the ACT grew up on reticulated gas. Queensland and Western Australia heat less often and argue less. The method does not change with the postcode. The hours of use do.

Same heat, different units

Electricity retail is cents per kilowatt hour. Gas retail is cents per megajoule, plus a daily supply charge, as comparing gas plans sets out. The physical conversion is fixed: 1 kWh = 3.6 MJ. That conversion is not a running-cost conversion, because appliances leak.

A simple way to put both fuels on one page:

• Take the gas usage rate in c/MJ. Multiply by 3.6 to get the cents you pay for 3.6 MJ of gas energy.
• Divide by the heater’s efficiency (0.7 for a tired ducted system, 0.85–0.95 for a decent modern flued heater). That is cents per useful kWh of heat.
• Take the electricity usage rate in c/kWh. Divide by the heat pump’s seasonal coefficient of performance, or use 1.0 for a resistive heater. That is cents per useful kWh of heat.
• Compare those two numbers, then add the extra daily supply you would drop if one fuel went away.

Worked shape, not a national tariff table. Gas at 3.2c/MJ on a 75 per cent ducted system is about 15c of useful heat per kWh. Electricity at 28c/kWh on a heat pump that averages a COP of 3.5 is about 8c of useful heat per kWh. Electricity at 28c on a bar heater is 28c. Gas can win against the bar heater and lose against the heat pump on the same street.

COP is not a lab sticker you enjoy forever. It falls in very cold weather, on an undersized unit, or when the filters are furry. Gas efficiency falls when the heat exchanger is dirty or the ducts leak into a roof space. Use conservative numbers, then look at last winter’s megajoules or kilowatt hours as a reality check.

Compare cents per useful kilowatt hour of heat. Raw c/MJ versus c/kWh is a category error.

The daily supply charge is part of heating

A house that keeps electricity (everyone) and gas (optional) pays two supply charges. If the gas connection exists for space heating, that daily fee is a heating cost. Over a year it is not a rounding error.

A house that would keep gas for cooking anyway should only count extra winter usage as the heating line. Be honest. A cooktop that runs 20 minutes a day does not need a 60 MJ/day winter connection. If the supply charge is the bulk of the gas bill, you are paying a membership to have a flame.

That membership is also why dual fuel versus separate accounts matters. A dual-fuel electricity discount that requires you to keep gas can lock in a supply charge you no longer need. Price the discount after you have decided whether the pipes stay.

Tariffs that change the electric case

Not all kilowatt hours are 28c.

• A time-of-use tariff makes evening heating — the 5–9 pm cluster — more expensive and overnight cheaper. A heat pump on a timer, or a house that pre-heats in the cheap window, looks better than a heat pump that only starts when people get home.
• Off-peak and controlled load still exist for some storage heaters and for many hot-water tanks. They are a different rate again. Do not use the general usage rate for a controlled-load tank.
• Solar self-consumption turns daytime heating (a heat pump on a sunny winter weekday, or a heat-pump water heater) into avoided imports. That is usually worth the retail rate, not a feed-in tariff.
• A home battery can move cheap midday energy — solar or Solar Sharer — into the evening heating peak. Model it only if you already own one or have a quote.

Gas does not usually have a household time-of-use clock. You pay c/MJ when you burn it. The flexibility advantage, if there is one, sits on the electricity side.

Prices still move each July. Why Australian electricity prices change is the background. Gas wholesale and network charges move on their own notices. Re-run the useful-heat comparison when either fuel reprices, not once a decade.

Climate, house and heater type

A Melbourne brick veneer with leaky ducts is not a Brisbane timber house with one living-room unit.

• Hours of use dominate. A system that runs six hours a night for four months will swamp a beautiful cents-per-useful-kWh figure. Insulation, draughts and a smaller conditioned zone cut hours. They are heating upgrades that do not care about fuel.
• Ducted versus room. Heating the whole house through leaky ducts is a different demand from heating the room you are in. Electrifying a single living area is a different capital job from replacing a whole-of-house gas furnace.
• Reverse cycle already installed. Many Australian houses already have a living-room heat pump for summer. Winter is a firmware setting and a filter clean. The capital is sunk. The running-cost comparison should use that unit, not a hypothetical new gas heater.
• Gas ducted still in good health. If the furnace is new and the ducts were just replaced, the capital argument for ripping it out is weaker. Run the operating costs. Replace at end of life unless the supply charge is already absurd.
• Portable LPG. Bottled gas is a different price again, and usually a worse one. Do not use reticulated c/MJ to justify a patio heater.

Hot water is a sibling, not a child. A heat-pump water heater on daytime solar or controlled load is often the first electrification that pays. Instantaneous gas with no supply-charge alternative is a different spreadsheet. Keep the two columns separate so a cheap shower cannot hide an expensive lounge.

Health, safety and the bits a tariff ignores

Unflued gas heaters have a combustion-air conversation that no cents-per-megajoule figure captures. Households with young children, asthma or a sealed room should treat an unflued unit as a health appliance first and a tariff second. Talk to a licensed gasfitter, not a comparison site.

Reverse-cycle units have a noise and a draught pattern. A cheap, badly placed head unit will be turned off, which makes it the most expensive heater in the house because it does not run when you need it.

Neither fuel is “green” on a slogan. Grid electricity is decarbonising at the NEM’s pace; your residual imports may already be cleaner than they were ten years ago. Combusted gas is still combusted gas. If carbon is part of the decision, say so honestly and still run the bill maths. A moral argument that ignores the supply charge will not survive the first winter invoice.

A working order of operations

Do this before you rip out anything.

• Pull a year of gas megajoules and a year of electricity kilowatt hours. Mark the winter quarters.
• Note both daily supply charges and both usage rates, including any controlled load.
• Identify what the gas is actually doing: space heat, hot water, cooktop, or all three.
• Convert last winter’s gas heat to useful kWh using a conservative efficiency.
• Estimate what a heat pump would have used for the same useful heat, using a conservative COP for your climate.
• Add or remove the gas supply charge depending on whether the cooktop stays.
• Get two installer quotes if the numbers are close. An undersized heat pump that never reaches set-point is a failed comparison, not a cheap one.
• Check concessions. Some medical cooling-heating rebates are electricity-side. They can tilt a close result.

If you are moving, do not take a previous occupant’s gas heating as destiny. Moving house is the moment a disconnection is cheap and a new ducted gas system is a ten-year decision.

There is no single winner for the country. There is a winner for a given winter, a given envelope of insulation, and a given pair of fact sheets. When the heat pump’s useful-heat cents undercut the gas furnace, and the gas supply charge is only there for that furnace, electricity is cheaper. When the electric option is a bar heater on a peak rate, gas still wins. Do the conversion. Leave the pub argument at the pub.