Therm
A therm is 100,000 BTU of natural gas energy — the billing unit on US gas bills. Certified gas water heaters list annual use in therms per year, so multiplying by your local rate gives the yearly running cost.
The national average residential gas price is around $1.45 per therm; a typical certified gas storage unit using ~180 therms/year costs about $260 annually, while an efficient tankless at ~130 therms runs closer to $190.
The equivalent figures for other fuels: annual kWh for electric and heat pump units, and gallons per year for propane models.
| Definition | 1 therm = 100,000 BTU of gas energy |
|---|---|
| In electrical units | 1 therm = 29.3 kWh — at $0.17/kWh that same energy would cost about $4.98 as electricity |
| In gas volume | About 96.7 cubic feet, so a therm and a CCF (100 ft³) are close but not identical |
| National average price | Around $1.45 per therm residential, with state averages roughly $1 to $2.50 |
| Certified gas storage use | 182–197 therms/year (median 190) ≈ $276 at $1.45 |
| Certified gas tankless use | 173–178 therms/year ≈ $258 — no standby losses, but the same hot water |
Therms, CCF, and what you are actually billed
Gas is sold by energy, not volume, because the energy content of a cubic foot varies with composition. Utilities meter volume in hundreds of cubic feet — CCF — and multiply by a heating-value factor, usually somewhere between 1.00 and 1.05, to convert it to therms. A therm is exactly 100,000 BTU, which is why every efficiency and cost calculation in this field starts there.
The rate people quote each other is usually the wrong one. A bill splits into a commodity charge, a delivery or distribution charge, and a fixed monthly customer charge, and only the first is the number in the news. To get the rate that matters for comparing appliances, take your total annual gas cost, subtract twelve months of fixed customer charge, and divide by your annual therms. In many service territories that all-in figure is 40–70% higher than the commodity rate alone.
Seasonality complicates it further: if you heat with gas, summer bills are almost entirely water heating and cooking, which makes July and August the cleanest months to estimate your water heater’s consumption from actual meter readings.
Converting between fuels
One therm equals 29.3 kWh. That single conversion explains most of the confusion around heat pump savings: at $1.45 per therm and $0.17 per kWh, the same energy costs about $1.45 as gas and about $4.98 as electricity — roughly 3.4 times more. A heat pump has to be about 3.4 times as efficient as a gas heater just to break even on running cost, which at UEF 3.9 versus 0.90 it barely manages.
Propane runs on a third scale: one gallon holds about 91,500 BTU, or 0.915 therm. At $2.70 a gallon that is nearly $3 per therm-equivalent, twice the price of natural gas. The certified propane models on this site consume a median of about 195 gallons a year — around $525 — which is why a propane household is usually the strongest candidate for a heat pump upgrade in the entire market.
For a heat pump the arithmetic runs backwards: divide the hot-water energy you need by the UEF to get purchased kWh, then multiply by your rate. Roughly 3,800 kWh of delivered hot water a year divided by UEF 3.9 is about 975 kWh, or $166. The same delivered heat from a 0.90 UEF gas tank is about 144 therms, or $209.
Reading annual therms on a label or a listing
Certified records and yellow EnergyGuide labels both quote estimated annual energy use, and for gas that is in therms per year. The certified gas storage models here cluster at 182–197 therms and the gas tankless models at 173–178 — a narrow spread, because the figures come from the same standardized test day rather than from any real household.
That is the key caveat. The High draw pattern behind most of these numbers assumes about 84 gallons of hot water a day. A two-person household using 40 gallons a day will burn substantially less than the label says, and a family of five may burn more. Use the certified therms to rank models against each other, and your own metered summer gas use to predict your actual bill.
Treat the dollar figure on the EnergyGuide label as illustrative only. It is computed at a national average rate that is typically a year or more out of date and never matches a specific utility. Take the therms, multiply by your all-in rate, and you have a number worth acting on.
Frequently asked questions
How much does a therm of natural gas cost?
The US residential average is around $1.45 per therm, but state averages run from roughly $1 to more than $2.50, and your all-in cost is higher than the commodity rate once delivery and fixed charges are included. Divide your annual gas bill, less twelve monthly customer charges, by your annual therms to find the rate that actually applies to you.
How many therms does a water heater use per year?
Certified gas storage models on this site are rated at 182–197 therms a year and gas tankless models at 173–178, both measured on a standardized 84-gallon-a-day test. At $1.45 per therm that is roughly $258–$286. Real households using less hot water than the test will burn proportionally less.
How many kWh is a therm?
29.3 kWh. At national average rates that energy costs about $1.45 as natural gas and about $4.98 as electricity, which is the single most important number in any gas-versus-electric water heater comparison.
Is a therm the same as a CCF?
Nearly, but not exactly. A CCF is 100 cubic feet of gas by volume; a therm is 100,000 BTU of energy. Since natural gas typically carries about 1,030 BTU per cubic foot, one CCF is usually a little more than one therm, and your utility applies a published conversion factor each billing period to translate between them.
How do I work out what my water heater costs to run?
Take the certified annual therms for the model and multiply by your all-in rate per therm. For electric models take the annual kWh and multiply by your rate per kWh. Adjust for your household size if it differs materially from the 84-gallon-a-day test assumption — or use the operating-cost tool on this site, which does the conversion at rates you enter.