When it comes to managing your home’s utility costs, the water heater plays a bigger role than you might think. In fact, water heating is typically the second-largest energy expense in the average home — accounting for around 18% of total energy use, according to the U.S. Department of Energy.
Payless Water Heaters helps California homeowners understand and manage these hidden costs. So, how much are you really spending to run your water heater each month?
In this guide, we’ll compare monthly energy costs for gas, electric and tankless water heaters; share practical tips to lower your utility bills; and explain why now might be the perfect time to upgrade.
Gas vs. Electric: Which Is Cheaper To Run?
The fuel source of your water heater makes a big difference in operating costs:
| Standard 50-Gallon Electric Water Heater | 50-Gallon Gas Water Heater | |
| COST PER HOUR | $2.69 | $1.18 |
| 8-YEAR ENERGY COST | $3,900 | $1,722.80 |
The energy cost of the gas water heater is less than half the energy cost of the electric unit. The gas water heater’s operating cost can be reduced even further, to just 75 cents per hour, by adding a mixing valve to heat water to a higher temperature and then blend it down, delivering 48 minutes of hot water per tank.
If you’re looking to stretch every energy dollar, gas typically comes out ahead — especially with today’s electricity rates.
Tankless Water Heaters: The Long-Term Saver
For energy-conscious homeowners or households with high water demand, tankless water heaters are an attractive solution with even more savings.
- A 200,000 BTU tankless model costs around $1.03 per hour to run but offers unlimited hot water on demand.
- Over 8 years, the total energy cost comes in at only $1,518.40, with $0 in repair costs, assuming regular maintenance.
Tankless systems eliminate standby heat loss, making them 24% to 34% more efficient than traditional tank models — especially in homes that use under 41 gallons of hot water per day.
Why the Age and Size of Your Water Heater Matter More Than You Think
Even among electric models, not all water heaters are created equal. Factors that can drive up your costs include:
- Older units (10+ years) that lose efficiency over time
- Undersized heaters that run constantly to keep up with demand
- Oversized tanks heating more water than you actually use
If you’re using an older electric unit, the average cost of electric water heater per month can range between $35 to $50, depending on usage, set temperature and energy rates.
Simple Tips To Lower Your Water Heating Bill
Whether you’re not ready to replace your unit or just want to save more, here are a few cost-cutting tips:
- Lower the thermostat to 120°F (saves energy and prevents scalding).
- Flush the tank annually to remove sediment buildup.
- Replace the anode rod every few years to prevent internal rust.
- Insulate your tank and pipes to reduce heat loss.
- Install low-flow fixtures to control hot water usage at the tap.
High Bills or Old Heater? It Might Be Time to Upgrade
If your water heater is old or noisy, or your energy bills have been creeping up, it may be time to explore a more efficient option. Modern models, especially high-efficiency gas or tankless units, can cut your long-term costs significantly while giving you a more reliable supply of hot water. Contact Payless Water Heaters to explore energy-saving options that are right for your home and budget.
