Water heaters are easy to ignore — until they stop working. The average one lasts about 8 to 12 years and accounts for roughly 15 to 20 percent of your utility bill. So if your heater is getting along in years, or if you're adding or upgrading a bathroom, remember the three cardinal rules of shopping for a standard storage water heater: Don't rush. Size matters. Energy efficiency matters more.
Admittedly, an ice-cold shower or a leaking heater makes it more urgent to get a new heater hooked up quickly. But if you choose one based solely on speed of delivery, you may end up with a unit that can't keep up with demand, costs more to operate, and fails sooner than it should.
Get Wise About Size
Even if you were happy with the old tank, don't automatically assume that it had the right heating capacity. To determine that capacity, you first need to add up about how much hot water your household uses during the busiest hour of an average day "Size a water heater for your demand 363 days a year, not the one or two days that you've got 25 relatives visiting," says Richard Trethewey, This Old House plumbing and heating expert. "Otherwise, you'll end up with an energy-gobbling beast in the basement."
This sum — your household's "peak-hour demand" for hot water — should be close to your water heater's "first-hour rating" (FHR) printed on each heater's yellow Energy Guide label. Basically, the FHR tells you how many gallons of hot water a heater can produce during an hour of high usage. (It is not the same as the number of gallons a tank can hold.)
When comparing the different types of heaters, you'll see that gas- and oil-fired units generally have higher FHRs, relative to their tank size, than do electric models. (Flames heat water more quickly than heating elements do.) If you come up with a high FHR on your worksheet, say 100 gallons or so, you may need to install a second water heater.
