What does a water heater cost to run?

The whole calculation, in three lines

Heating water is one of the few household energy questions with genuinely simple physics. A gallon of water weighs 8.329 pounds^[1], and raising one pound of water by one degree Fahrenheit takes one British thermal unit. So the heat your household actually needs is gallons drawn, times 8.329, times the temperature rise, times 365 days. Nothing about the appliance enters yet — that is the heat the water demands regardless of what supplies it.

The appliance enters once, as a divisor. Divide the heat delivered by the uniform energy factor and you get the fuel actually burned, including everything lost through the tank wall while nobody is drawing. Then convert to whatever you are billed in: 3,412 Btu to the kilowatthour^[2], 100,000 Btu to the therm^[2], 91,452 Btu to the gallon of propane^[2]. Natural gas needs one extra step because it is priced per thousand cubic feet and burned per therm: at 1,037 Btu per cubic foot^[3], a thousand cubic feet is 10.37 therms.

That is the entire model. There is no fudge factor and no seasonal adjustment, which is worth knowing because it tells you exactly where the answer can be wrong: it can be wrong about how much hot water you draw, and it can be wrong about how closely a laboratory efficiency rating matches your real duty cycle. It cannot be wrong about the arithmetic.

Where the efficiency number comes from, and why it is a floor

Most calculators ask you to enter an efficiency rating, which is a strange thing to ask of someone who does not yet own the appliance. This one derives it. Federal standards state a minimum uniform energy factor as a formula in rated storage volume, selected by product class and by the usage bin the first-hour rating lands in — so class plus capacity plus bin fully determines the minimum, and the sizing tool already produced the bin.

The important caveat, and it is repeated beside the answer rather than buried here: a minimum is a floor. It is what an appliance is forbidden to be worse than, not what any particular appliance is. A well-chosen unit beats it, sometimes substantially. That is why the tool takes your own label figure and uses it instead when you have one, and why the estimate without it should be read as the cautious end rather than the expected outcome.

Heat pumps get a specific and honest treatment. Above fifty-five gallons the electric storage minimum is greater than 1.0, which resistance heating cannot physically reach, so those rows describe heat pumps and are used exactly as published. At or below fifty-five gallons the minimum is the resistance floor and says nothing about a heat pump at all — so there the site applies the published statement that a heat pump is 2 to 3 times as efficient as resistance^[4], shows that multiplication on screen, and labels the result derived rather than sourced. It is our arithmetic, not somebody else’s measurement, and the page says which.

What running cost does not capture

A heat pump water heater cools and dehumidifies the space it stands in, which is a benefit in a humid basement in July and a cost in a heated utility room in January — and neither shows up in any efficiency rating. It also has siting requirements a tank does not: the space has to stay between 40 and 90 degrees year round and offer at least 1,000 cubic feet of air^[4]. An unheated garage in a cold climate fails the first test and a sealed closet fails the second, and in both cases the appliance falls back to its resistance elements and quietly stops being the appliance you paid for.

Published running-cost ranges are worth having as a sanity check even though they hide their assumptions. One cost guide puts an electric tank at $530–$600 a year and a heat pump at $160–$190^[5]. The tool prints its own figure next to whichever of those applies. When they disagree sharply the reason is nearly always the hot-water volume assumed — theirs is unstated, yours is in the box.

National fallbacks, used only where a state figure genuinely does not exist: 18.44 cents per kilowatthour^[6], $15.34 per thousand cubic feet of gas^[7], and $2.674 a gallon for propane^[8].

Questions people actually ask