The Dollar Stretcher

By Gary Foreman

Dear Dollar Stretcher,
I recently talked to a handyman/fix-it guy who said that for most efficient use, I should set my hot water heater as hot as possible. His theory is that if you have very hot water, you only use a little of the hot water mixed with a lot of cold to take a comfortable shower vs. using lots of water heated to a comfortable temperature (as I have it set now). I don't have children, so the safety issues of keeping my temperature set lower are not as great. Which is more efficient? My water heater is almost due to die anyway. It's 10+ years old.
Laura M.

Answer: Good question. Utility companies say that a water heater can contribute between 15 and 20% of your utility bill. It's the third largest energy user after heating and cooling. So it certainly pays to find ways to curb use.

But, much as I respect a good handyman, Laura's fix-it guy is way off base. In fact, for every degree you lower your water heater thermostat you'll reduce your cost by 1%. Laura should set the thermostat as low as possible. Typically 125 degrees is sufficient. She can go too far. Anything lower than 120 degrees can allow bacteria to grow in the tank. That's dangerous.

Let's illustrate why the fix-it man's theory isn't true. Think of a tea kettle on the stove in place of your water heater. Suppose you wanted to continually keep the water at 125 degrees. After a little experimenting you'd find the right setting on the burner to maintain the water temperature.

Now let's try the fix-it guy's plan. To make the water hotter what would you do? Turn up the burners under the tea kettle. And that would consume more electricity or gas. So you'd be using more energy.

Whether you consume only a little of the water or a lot, it will always take more energy to keep the water heated to a higher temperature.

So what can Laura do to reduce her energy bills? Water heater jackets are the first step if you have an older unit. It's a simple do-it-yourself project that costs less than $20.

Laura also needs to know where the hot water is going. Running the washing machine with both wash and rinse cycles set for "hot" will consume 32 gallons. Changing the settings to a warm wash and cold rinse would reduce that to 7 gallons. A bath or long shower uses 20 gallons. The dishwasher runs through 10 gallons per load.

Experts suggest that consumers use cold water laundry cycles whenever possible. Unless your clothes are very dirty, a cold rinse will be sufficient for proper cleaning.

The average family can take a lot of showers during a month. A good showerhead will reduce water consumption by half. Assuming daily showers for a family of four, that could be as much as 1,200 gallons saved each month.

Your electric company may offer you a discount if you allow a 'peak load' controller to be placed on your water heater. It turns off your water heater when the electric company is facing high demand.

It's also important to remember that the water heater does require some regular maintenance. Mineral build up can reduce efficiency. Draining a few gallons from the tank quarterly will solve the problem.

Laura mentioned that her water heater is old. Perhaps it's time to consider a new one. Old water heaters will operate for many years at a low efficiency before they fail. Naturally, that low efficiency will translate into higher energy bills for Laura.

There are different types of water heaters available. The most common water heater is a storage tank with water that's heated to a preset temperature. Most use electricity or natural gas to heat the water.

A "demand" or "tankless" water heater stays off until hot water is required. Generally they work best in situations where only a limited amount of hot water is needed at any given time.

When Laura shops for a new water heater she'll want to find one that's energy efficient. An easy way to do that is to compare the EF (energy factor) for different models. The higher the number the more efficient the water heater.

Another consideration is the FHR. That stands for First Hour Rating which tells how much hot water can be supplied under peak load. A bigger tank does not always mean a higher FHR. Buy one that's big enough to handle your needs but not wasteful. You can figure out how much hot water you need based on the usage figures above.

Laura will find that gas water heaters generally cost a little more, but are less expensive to operate. Typically the energy savings more than make up for the higher purchase price. She should also check with her electric or gas company. Many will help you to pay for a new water heater.

Bottom line for Laura? Turn the water heater thermostat down, try to consume less hot water and consider replacing her older water heater.

Gary Foreman is a former purchasing manager who currently edits The Dollar Stretcher Web site Contact Gary at You'll find hundreds of free articles to save you time and money. Visit today!