operating cost of water heaters Every appliance has two price tags. The first is the price you pay when you purchase the appliance. The second is the cost of operating the appliance over its lifetime. You might be surprised if you consider how much it costs to operate an appliance compared to what seemed to be a good deal when you purchased it. When you shop for a new appliance, look for the ENERGY STARÆ label. Appliances w/ this label usually exceed minimum federal standards by a substantial amount. ENERGY STARÆ rated products are always among the most efficient available today. Also look for the Energy Guide label displayed on most major appliances. The bright yellow & black Energy Guide labels do NOT tell you which appliance is the most energy efficient, but they will tell you how much it will cost to operate the appliance so you can make your own comparisons.   efficiency The least expensive water heaters are the most expensive to operate. Water heating is the third largest energy expense in your home. It normally accounts for about 14% of the utility bill. Heaters 10 years old or older probably have an efficiency of no higher than 50%. A water heater's efficiency is measured by its energy factor (EF). EF is based on recovery efficiency, standby losses & cycling losses. The higher the EF, the more efficient the water heater. Electric resistance water heaters have an EF ranging from 0.7 to 0.95; gas water heaters from 0.5 to 0.6, w/ some high-efficiency models ranging around 0.8 & heat pump water heaters from 1.5 to 2.0. Some consumers buy water heaters based on the size of the storage tank, but the peak-hour demand capacity or the first hour-rating (FHR) provided on the Energy Guide label is actually more important. The FHR is a measure of how much hot water the heater will deliver during a busy hour.   water heater storage A variety of fuel options are available for conventional-storage water heaters: electricity, natural gas, oil & propane. Ranging in size from 20 to 80 gallons (75.7 to 302.8 liters), a storage heater operates by releasing hot water from the top of the tank when the hot water tap is turned on. To replace that hot water, cold water enters the bottom of the tank, ensuring that the tank is always full. Because the water is constantly heated in the tank, energy can be wasted even when no faucet is on. This is called standby heat loss. Newer, more energy-efficient storage models can significantly reduce the amount of standby heat loss, making them much less expensive to operate. To determine the most energy-efficient model, consult the Energy Guide label required on storage water heaters. Energy Guide labels indicate either the annual estimated cost of operating the system or energy efficiency ratings.   demand (or instantaneous) water heaters It is possible to eliminate standby heat losses from the tank & reduce energy consumption 20%-30% w/ demand (or instantaneous) water heaters, which do not have storage tanks. Cold water travels through a pipe into the unit & either a gas burner or an electric element heats the water only when needed. With these systems, you never run out of hot water. One potential drawback w/ demand water heaters is a limited flow rate. Typically, demand heaters provide hot water at a rate of 2 to 4 gallons per minute. This flow rate might suffice if your household does not use hot water at more than one location at the same time (showering & doing laundry simultaneously). To meet hot water demand when multiple faucets are being used, demand heaters can be installed in parallel sequence. Gas-fired demand heaters tend to have higher flow rates than electric ones, but they can waste some energy even when no water is being heated if the pilot lights stay on.   >> page 2