Short definition

Choosing between a natural gas and LPG (propane) water heater is a fuel-match decision. The appliance is listed for one fuel by default; switching requires a manufacturer conversion kit and a registered gas-piping contractor. In Washington, where natural gas is available, it’s roughly 2 to 3 times cheaper per BTU than propane.

What it is

Every gas water heater is shipped configured for either natural gas (NG) or liquefied petroleum gas (LP / propane). The two fuels burn at different stoichiometries: propane needs smaller burner orifices and higher manifold pressure (~11” water column versus ~7” WC for NG). The air-shutter setting on the burner is also different.

A factory NG appliance running on LP (or vice versa) without a conversion kit will burn poorly — wrong flame size, sooting, elevated CO, and potentially permanent damage to the heat exchanger. Conversion kits exist for most modern water heaters and contain the correct orifices, regulator, and instructions.

The decision isn’t about heating performance — both fuels heat water just fine — it’s about availability and cost.

Why it matters to a homeowner

The cost gap is large. In WA, residential natural gas (PSE, Cascade NG) typically runs $1.20–$1.80 per therm including distribution, which equates to roughly $12–$18 per million BTU. Residential propane at $3.00–$5.00 per gallon (91,000 BTU per gallon) works out to $33–$55 per MMBTU. Propane is roughly 2 to 3 times more expensive per BTU than natural gas where both are available.

That gap shapes every fuel-choice conversation. If natural gas is at the street, the math almost always says use it. If natural gas is half a mile away and the only option is a $20,000 utility extension, propane is the practical answer despite the higher running cost.

The other reason this matters: an electric or heat-pump water heater is a third option that competes with both. Washington’s Clean Energy Transformation Act and PSE rebates have shifted the new-construction landscape; the heat-pump water heater (HPWH) is increasingly the default in metro WA.

When you’ll encounter this term

  • Old furnace and old water heater both reaching end-of-life on a Bellevue NG service: replace in-kind with NG, no conversion needed
  • Buying a rural Sequim home with a propane tank: confirm tank ownership and current contract; estimate annual fuel cost vs. previous NG home
  • Building new in unincorporated Snohomish County off the gas main: choose between propane, electric (HPWH), or heating oil (rare)
  • Considering switching the whole home from propane to electric: one-time install cost is high, but eliminates fuel deliveries and qualifies for some PSE incentives

Cost comparison (WA, 2026)

FuelResidential pricePer MMBTU
Natural gas (piped, PSE/Cascade)$1.20–$1.80 / therm$12–$18
Propane (delivered, 500-gal tank)$3.00–$5.00 / gallon$33–$55
Switching cost — NG service install$1,000–$5,000+ depending on distance to main—
Switching cost — LP tank + line install$1,500–$5,000—
Conversion kit (NG ↔ LP)$50–$200 part + $200–$600 labor—

Net result: where NG is available, it’s cheaper to operate. Where it isn’t, propane is a viable option with a known higher fuel cost.

Common decision mistakes

  • Choosing LP because NG “isn’t on the street,” without checking. Sometimes a gas main is one block away. The utility may extend service for a modest cost; ask before assuming.
  • Choosing an NG appliance for a property heading toward all-electric. Sunk cost on a fuel you plan to abandon. Consider HPWH instead.
  • Buying a wrong-fuel appliance and trying to convert post-purchase. Manufacturer warranty often voids non-listed conversions. Buy the right fuel listing the first time.
  • Misunderstanding tank ownership. Leasing a propane tank from a delivery company often locks you into that supplier; an owned tank can be filled by anyone.

Common variants and disambiguation

  • “Natural gas” in this context almost always means piped natural gas. CNG (compressed) and LNG (liquefied) are vehicle / industrial fuels, not residential.
  • “LPG” internationally includes propane and butane. In US residential, LPG = propane.
  • Electric water heater (resistance) and heat-pump water heater (HPWH) are non-combustion alternatives competing with both NG and LP. Worth pricing all three together at replacement time.

Hazard / safety notes

The single biggest safety risk in this space is converting an appliance to the wrong fuel without the listed kit. An NG appliance run on LP burns rich, produces soot, and produces carbon monoxide. The reverse runs lean and unstable.

Conversion is not a DIY job. It requires a registered gas-piping contractor in WA (or a Seattle Gas Piping Mechanic in city limits), the manufacturer-supplied kit, and post-conversion combustion verification. Save the conversion-kit instructions; they’re part of the appliance record.