Beyond Rebates: How Utilities Are Tackling Winter Heating Costs

Concern around winter heating bills is one of the biggest barriers to residential electrification. Energy-efficient heat pumps significantly reduce energy costs in most markets, but in colder states, many homeowners worry that switching from fossil fuels to electric heating could limit savings or even increase monthly utility bills in the winter. States and utilities are increasingly recognizing that electrification depends not only on upfront incentives but also on long-term energy affordability.

In response, Massachusetts introduced a new Seasonal Heat Pump Rate effective winter 2025 for residential customers who heat their home with heat pumps. From last November through April, heat pump owners received a discounted electric rate that was 55% lower than market rates. As of March 31, homeowners in the program saved more than $250 on average.

For HVAC contractors installing heat pumps, programs like this are increasingly important. Customer discussions are no longer centered solely around rebates and install costs, they now include monthly utility savings and long-term operating costs. Lower winter electricity rates help contractors position heat pumps as both energy efficient and financially sustainable.

Massachusetts is likely to become a model for utilities and states to use rate design to support heat pump adoption. Across the country, states are beginning to use rate design as a heat pump conversion lever alongside rebates and tax credits. For example, Con Ed recently introduced a "Steady Use Rate" in New York, designed for residential customers who have fully or partially replaced their fossil fuel with heat pumps. The rate features lower delivery charges during off-peak hours to help address the cost of electricity during the winter. Case studies show customers enrolled in the program can save an estimated $640 depending on usage.

As utility rate programs and incentives continue evolving, contractors increasingly need support navigating rebates, financing, and new utility programs. Platforms like Coral help contractors instantly claim rebates, connect to low-cost financing, and take advantage of innovative rate programs. If you're a contractor, building owner, or policymaker interested in learning more, our team would love to chat.