How To Save Money On Your Water Heater Bill

Posted on: July 22, 2015 | by: July 26, 2017

The average household spends between $400 to $600 each year on heating water; it’s the second largest energy expense in your home, accounting for up to 18 percent of your total energy use. With such a significant portion of your energy budget dedicated to water heating, homeowners look for ways to save money with their water heaters. Below are some energy-saving tips that will help you conserve hot water, and money.


  • Lower your water heater’s thermostat settings

    Your water heater’s thermostat is likely set higher than really needed. Many manufacturers set their thermostats at 140°F, but most households are comfortable with a water temperature around 120°F. If your water heater’s thermostat is set at 140°F, you could be wasting up to $61 each year through standby heat losses while your water heater stores water at a hotter temperature, and as much as $400 in demand losses as you use water that is hotter than needed! For instructions adjusting your water heater’s thermostat, see our Water Heater Maintenance Guide.


  • Insulate your hot water system

    Insulating your hot water storage tanks and hot water lines will help you retain more heat and limit energy loss. While insulating the hot water pipes within walls can be cost-prohibitive, you can easily install insulated pipe sleeves on the water lines that extend from your water heater or that are installed in an accessible crawl space or basement. This improvement can save you around $12 each year and help you conserve water, as you won’t have to wait as long for hot water to reach your showerhead or sink faucets.
    Insulating your hot water storage tank can be done with an insulation blanket, which you can purchase from your local hardware store. Insulating your tank is only warranted if your equipment is located in an unconditioned space, like a basement or attic. If you have a water heater that is factory insulated at R-16 or higher, an insulating blanket is not needed; reference your owner’s manual to see your water heater’s factory insulation level.


  • Fix hot water leaks

    Hot water leaks from your sink faucets, shower heads, and tub faucets account for both energy and water waste. A hot water leak at a rate of one drop each second amounts to 1,661 gallons of water each year, at a cost of $35 in energy! If you notice leaks, fix them right away rather than ignoring them.


  • Change your hot water habits

    By changing your hot water habits, you can reduce the amount of hot water your household consumes, saving money with each adjustment. Some simple-to-implement changes include:

    • Wash laundry using cold water cycles when possible. Also, utilize the cold water rinse setting on your machine, if applicable.
    • Take short showers instead of baths. Save even more water when showering by installing a low-flow showerhead, which can help you reduce your hot water use in the shower by as much as 60 percent!
    • Only run your dishwasher when it is full rather than running multiple smaller loads.


Having issues or have more questions about your water heater? Contact a local trusted HVAC contractor!

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