Water Heater Operating Cost Calculator
Running cost is delivered heat ÷ efficiency × your rate. Enter your daily hot-water use, your temperature rise and the unit’s UEF, then read the yearly bill for electric or gas — and see which lever moves it most.
1 Enter your numbers
Running cost is delivered heat ÷ efficiency × your rate — about $694/yr here. Gas is usually cheaper to run per year, electric resistance the most expensive; enter YOUR utility rate and your unit’s UEF from its EnergyGuide label.
An operating-cost estimate answers the question a spec sheet never does: not what the heater costs to buy, but what it costs to own. The physics is fixed — it takes 8.33 BTU to lift one gallon of water 1 °F — so the only three things that move your bill are how much hot water you draw, how far you heat it (the temperature rise, ΔT), and how efficiently your unit turns fuel into that heat (UEF). Price is the multiplier on top.
Because the tool holds no rate of its own, it stays correct forever: you supply the $/kWh or $/therm from your bill, and the answer tracks your real market. The default preset — a family of four, 64 gal/day, heated from a 50 °F inlet to 120 °F — is a realistic anchor you can then bend to your own routine.
Formula
The identity, step by step:
- Temperature rise: ΔT = output_temp − inlet_temp
- Annual delivered heat: annual_BTU = daily_gal × 365 × 8.33 × ΔT
- Electric: annual_kWh = annual_BTU ÷ 3,412 ÷ UEF, then cost = kWh × $/kWh
- Gas: annual_therms = annual_BTU ÷ 100,000 ÷ UEF, then cost = therms × $/therm
Dividing by UEF is what charges you for the unit’s inefficiency and its standby loss — a gas tank at 0.62 burns far more raw fuel than its 0.90 tankless cousin to deliver the identical hot water.
Worked example
Family of four, electric tank. 64 gal/day, ΔT = 120 − 50 = 70 °F, UEF 0.92, $0.16/kWh:
- annual_BTU = 64 × 365 × 8.33 × 70 = 13,621,216 BTU
- kWh = 13,621,216 ÷ 3,412 ÷ 0.92 = 4,339 kWh
- cost = 4,339 × 0.16 = $694/yr
Swap to a gas tank (UEF 0.62, $1.20/therm) on the same water and it falls to about $264/yr — the fuel switch, not the thermostat, is the big lever here.
Measure first, then read the right rate
Measure this first: your daily hot-water gallons (a shower is ~17–20 gal), your winter inlet temperature (it can swing 25 °F between a Minnesota January and a Texas July, and a colder inlet means a bigger bill), and the UEF printed on the EnergyGuide label — not the marketing “efficiency” figure.
Common mistakes: using a national average rate instead of your own; forgetting that a heat pump’s UEF above 1.0 is real (it moves heat, so its bill is a fraction of a resistance tank’s); and ignoring standby loss on a lightly-used tank — at very low draw, a tankless’s zero-standby design widens its lead.
Reference table
Typical Uniform Energy Factor (UEF) by type — a labeled planning snapshot. UEF is delivered hot-water energy ÷ energy consumed, so a higher number means a cheaper year. Confirm your unit’s figure on its yellow EnergyGuide label; a heat pump exceeds 1.0 because it moves heat rather than making it.
| Type | Typical UEF |
|---|---|
| Gas storage tank | 0.62 |
| Electric storage tank | 0.92 |
| Gas tankless | 0.90 |
| Electric tankless | 0.98 |
| Heat-pump / hybrid | 3.50 |
| Condensing gas | 0.90 |
| Propane tank | 0.62 |
Frequently asked questions
How much does it cost to run a water heater per year?
On the default family-of-four draw (64 gal/day, 70 °F rise), roughly $694/yr on an electric resistance tank at $0.16/kWh and about $264/yr on a gas tank at $1.20/therm. Your figure scales with your own gallons, temperature rise, UEF and utility rate — enter them for a number that matches your bill.
Is gas or electric cheaper to run?
In most markets a gas tank is cheaper to run per year than an electric resistance tank, because a therm of gas is usually far cheaper per delivered BTU than resistance electricity — even though the gas unit’s UEF is lower. The exception is a heat-pump water heater, whose UEF near 3.5 can beat gas. Run both fuels with your real rates to be sure.
What is UEF and where do I find it?
UEF (Uniform Energy Factor) is the standardized efficiency rating — delivered hot-water energy divided by energy consumed. It is printed on the yellow EnergyGuide label and the spec sheet. Typical values: electric tank ~0.92, gas tank ~0.62, gas tankless ~0.90, heat pump ~3.5.
Why does my incoming water temperature matter?
Because you pay to heat water across the gap between the incoming (inlet) temperature and your setting. A 40 °F northern inlet needs an 80 °F rise to reach 120 °F; a 68 °F southern inlet needs only 52 °F. Same household, a third more energy in the cold climate.
Does lowering the thermostat save money?
Yes — a smaller rise means fewer BTU and less standby loss. Dropping from 140 °F to 120 °F cuts the rise and the bill, and reduces scald risk. Going too low, though, can favor bacteria; 120 °F is the common compromise. The temperature-setting and scald / Legionella tradeoff is the manufacturer’s and a professional’s call.