Electric furnaces typically cost more to run than their counterparts that burn fossil fuel, which makes them an inefficient financial choice. While they tout high efficiency ratings, efficiency losses at the power plant and during transmission drive up their operating costs.
A majority of power plants use natural gas or coal, but they must first convert the heat they generate into electricity to send it to homes. Natural gas and heating oil furnaces use the heat generated directly. Homeowners in more temperate areas, however, may want to look at heat pumps. By using electricity, heat pumps are able to capture the warmth in the air outdoors and transfer it indoors. If the temperature rarely drops below freezing, these systems operate relatively efficiently compared to traditional furnaces.