The rate schedule — not the rebate — determines whether electrification saves or costs money
The same heat pump in the same house produces opposite outcomes depending on the electric rate. At Wisconsin's flat residential rate, heat pump heating costs 1.5–1.9× more than gas. At off-peak TOU rates already available for EV charging, heat pumps beat gas by 27–39%. Minnesota proved this at scale: a winter discount + TOU rate made heat pump heating cheaper than gas — with no subsidy required.
Same HP, flat rate: above gas parity
Same HP, off-peak TOU: below gas parity
Gas heating (Minnesota)
$2,680
Annual heating cost. Standard gas furnace at Minnesota residential rates.
vs.
HP with winter discount + TOU
$2,591
Annual heating cost. Heat pump on Minnesota's winter discount + TOU rate. Bill-neutral conversion — no subsidy needed.
1.5–1.9×
HP heating cost relative to gas at flat residential rates. Every standard residential rate in the WI corpus produces a cost penalty for heat pump owners.
$6.08
HP heating cost per MMBtu at WPSC's EV charging off-peak rate — 39% below gas. This rate exists today. It's just restricted to EV chargers, not heat pumps.
0
States in the five-state corpus with a deployed heat pump-specific residential TOU rate. The rate architecture that solves the economics does not yet exist for heating.
Rebates solve the upfront cost problem. Rate design solves the ongoing cost problem. A $14,000 HEAR rebate pays for the equipment — but if the customer's monthly bill goes up, the conversion fails regardless. Wisconsin's data proves the rate is the binding constraint: the same equipment on the same grid produces opposite outcomes at different rate schedules.
$/MMBtu = (electric rate ÷ COP) × 293.07. All HP scenarios: seasonal COP 3.0, 80 MMBtu annual heating load. Gas: 90% AFUE, ~$9/MMBtu delivered (~$10 effective). MN data from ACEEE "Electricity Rates That Keep Bills Down after Electrification of Home Heating" (April 2025).
Sources: WI flat rates — PSCW Vol. 7, Sheet E5.00 (WPSC Rg-1: $0.14802/kWh); WE 2026 Brochure p.3 (Rg1: $0.19342/kWh). WI off-peak rates — PSCW Sheet E13.01 (COEV-R: $0.06223/kWh); Sheet E5.60 (Rg-RR: $0.07518/kWh); Sheet E5.50 (Rg5-OTOU: $0.08353/kWh). MN winter discount + TOU data — ACEEE b2502, "Electricity Rates That Keep Bills Down after Electrification of Home Heating," April 2025 (MN $2,680 gas → $2,591 HP). ME/CT — same ACEEE report (gap too large for rate reform alone). Zero HP-specific TOU rates — confirmed by complete review of WI tariff schedules and absence of any such rate in MI, PA, VT, or MA program filings.