To calculate central heating expenses, determine the following: square footage of the home, local heating degree days (HDD), fuel type and price, thermostat settings, and system efficiency. Formula: (Square Footage × HDD × Fuel Price) / System Efficiency. For example, a 2,000 sq ft home in a region with 3,000 HDD using natural gas at $1.50 per therm and a 95% efficient furnace would cost approximately $4,500 annually.

Heating degree days (HDD) measure seasonal demand by tracking temperature deviations from 65°F. The U.S. Energy Information Administration (EIA) reports HDD varies by region; the Northeast averages 3,500–4,000 HDD, while the South is 1,500–2,500. Fuel prices fluctuate yearly, with natural gas averaging $1.20–$1.80 per therm (2023 EIA data) and heating oil $2.50–$3.50 per gallon. System efficiency, measured by AFUE (annual fuel utilization efficiency), impacts costs. Modern furnaces achieve 95–98% AFUE, while older systems may be 70–80%. Insulation quality and thermostat settings (e.g., 68°F when occupied) also affect energy use. A 2022 study by the Department of Energy found proper insulation reduces heating costs by 15–30%. These factors collectively determine annual expenses, with the average U.S. household spending $780–$1,500 annually on heating. Optimizing HDD through energy-efficient upgrades and maintaining system efficiency can significantly lower costs.