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Electric Heat & Your Bill

Electric Heat & Your Bill

Heating our homes is a major energy expense in Minnesota.  The amount we pay can vary significantly based on the type of heating system and type fuel used. Around 20 percent of Minnesota households heat their homes using electricity, especially in greater Minnesota.  If these homes use electric resistance heat (think floorboard registers or electric furnaces), home heating costs are especially expensive. 

There are a few options made available to Minnesota residents to ease the costs of electric heating. 

  • Per state law, primary fuel for heating a home is not subject to sales tax from November to April. This includes city, state, and transit taxes. Utilities usually apply this exemption automatically for customers heating their home using natural gas, but the same assumption is often not applied to customers who heat their home using electric heat. 

    If you heat your home using electric heat, contact your utility today to remove sales tax from your monthly bill. Depending on where you live, you could save up to 10 percent on your monthly bill. This exemption also applies to renters who pay their heating bills. According to the Minnesota Department of Revenue, if you have been mistakenly paying sales tax on your primary heating fuel, you can request a refund up to 3.5 years of overpaid sales tax. 

    The sales tax exemption only applies to the primary heating fuel used in your home. For example, if you heat your home using an electric air source heat pump with a backup gas or propane furnace, whichever is your primary heating source will not be taxed.
  • Further, contact your utility to see if they offer a discounted rate for electric heat. For example, Xcel customers with electric heat can pay about 2.8 cents less per kWh with the electric space heating rate from October-May during the winter.
  • If electricity is your primary heat source but you have a backup system which uses a different fuel, some utilities provide discounts on your electric heat if you allow them to control your use during times of peak demand. Your electric heating source may be turned off periodically, but with a backup heating source that kicks in automatically, you shouldn’t notice any change in your home’s temperature. In return, you may get a discount on your electric rate.
  • Finally, consider upgrading your electric resistance to an Air Source Heat Pump (ASHPs). ASHPs are much more efficient and often a good investment for homes already using electric resistance heat.  You can find more information here. As Minnesota moves towards a cleaner and cleaner electric grid, air source heat pumps can be an excellent way for us to meet statewide climate goals.    

Electric resistance heat can be the most expensive way to heat your home, but there are options available to keep your bills low in the winter months. If you have questions about your heating bills, or if you are looking for more ideas to reduce your energy usage and your monthly bills, reach out to CUB by: emailing info@cubminnesota.org, calling us at 651-300-4701, or messaging us on Facebook.

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