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Two tangential things to add:
1. Consider an on-demand water heater. Ours, installed two years ago, has already paid for itself. The only downside is that it takes longer before totally hot water gets to the faucet (with a tank, hot water diffuses into the pipes).
2. Don't forget to drain your tank water heater once a year. I'll bet fewer than 5% of people do this, but it will extend the life of the tank.
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- Al -- Always serious, never joking. No, wait. Never serious... Always... I forget.
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