Heating water is where a lot of the money you pay the gas company goes toward.  There are several steps that can be taken to help control the cost of water heating

The type of water heater used affects the heating costs.  The efficiency of the heater also affects the cost.  The other things that will affect the cost are the temperature setting and the number of gallons of hot water that are used.  In 2003 gas water heater costs accounted for about 34% of the average American gas bill.  Water heater efficiency is an important factor that affects operating costs.  The more efficient models can save money through lower operating costs.    The higher the temperature setting on the water heater the more it will cost to operate. 

There are several ways to help control water-heating costs.  It is possible to save as much as fifteen percent on water heating costs by lowering the setting on the water heater thermostat.  If you have an automatic dishwasher without an internal heater, the owner's manual should be consulted for manufacturer-recommended temperature settings.  By using cool or cold water for clothes washing, it is possible to save another ten percent off hot water costs.  Bathing can account for more than half of a person or family's hot water usage, taking shorter and cooler showers rather than baths can help reduce the bill.  Baths use as much as two and a half  times as much hot water as a five-minute shower.  Leaky faucets should be fixed as soon as possible to prevent hot water from being wasted.  One drop of water a second can waste 2,500 gallons per year, not to mention the price if the leak is hot water.  Another way to reduce water heating bills is by running dishwashers only when they are full.  Gas water heaters should be turned to the "Pilot" setting when the family goes on vacation.  Electric water heaters should be shut off at the circuit breaker when you leave for vacation. 

There are several products on the market nowadays to help conserve water.  Low-flow showerheads are one way to help reduce both your water and gas bill.  They help reduce how much hot water is used while showering, which lowers heating costs, as well as reduce overall water use, lowering that bill as well.  Flow restrictors can be installed in faucets throughout the home which will reduce heating costs even lower.  Purchasing an energy-efficient water heater is an important thing to do.  Compare the operating costs as well as price when trying to find the best model to meet your needs.  In the long run, a slightly more expensive unit can save you money compared to a cheaper, but less efficient model.  Size is also important.  There are steps in finding the proper size for the needs of the family using it. 

The first step is to determine the maximum use of hot water that may be used in any one hour of a day.  The size of the family, the appliances used in the household, and the patterns of water use need be considered.  The model should be chosen with a first-hour rating that equals what the maximum hourly use was determined to be.  In the US that rating appears on a yellow and black EnergyGuide label that can be found on all water heaters.  This rating is how much hot water that water heater can supply in one hour.  Once the models with the proper first-hour rating are found the EnergyGuide label can be used to estimate annual operating costs


Source:  Pamphlet put out by The Gas Company "Water Heaters: Energy Savings and Purchasing Tips"