Have the customer buy the water heater themselves. I'm speaking mostly of the situation regarding older homes and not new construction. That way the bill of sale ties the owner of the product directly to the warranty. If that was a Kenmore/Sears water heater....that would of been replaced free of charge all inclusive on the first year with the option AT TIME OF PURCHASE and 30 days thereafter to buy additional 5 years of that same coverage where all labor and materials are covered. 8 months is truly a defective heater from the go and the mfg. should of ate the labor on that, no doubt. Charging $110 was sort of a useless charge for that task at hand; most installs head towards $300 if you are a legit company and work like you are going to stay in business years down the road. All my customers *have* to purchase their water heater before I'll install/replace the old one. They actually prefer it so I don't make a marginal profit on it and I prefer it when something goes wrong with them. I didn't make the water heater, I just installed it. If I installed it wrong, I'm on the hook. Otherwise they have to follow the chain of command and get the local authorized reps to come out and diagnose the problem, fix it to maintain that warranty. Otherwise when you take those matters into your own hands to help out John Q......it backfires because you just voided the warranty. Doesn't matter if you are a licensed plumber or not; A.O. Smith is notorious for pulling the plug on a customer that has screwed with their tank and then expects a service tech to fix the mess they started. That's part of the implied warranty deal; only trained hands in kahootz with the mfg. are allowed to repair under warranty confines. After the warranty is expired.....it's anyones game to contend to.

Saltidog, Dude, chill. I was respectfully saying you had a different opinion - not what your opinion was or that it had anything to do with the heating elements. You can disagree without being disagreeable. I do understand thermodynamics very well, thank you. There is no "trend" and no misrepresentation. Yes, the units have resistive elements as backup, for high demand situations, and when the ambient temperature gets low enough that enough heat can't be extracted using the heat pump (for geospring unit that's 45 degrees F) Saltidog, I don't know what you are getting your panties in a bunch about... yes, I understand your heater works well for you. I would expect that. It's installed in a basement that's at least 700 cubic feet of space. Because it's underground it will maintain a temperature of around 50 - 55 degrees or more if there are other heat sources in the basement. That's enough to allow the heat pump to work just fine. The water heater will work in almost all situations / applications where one would normally install a tank heater. It will even run on the heat pump in most situations. The question is when you have the water heater in a fully conditioned space (not basement) and that space is being heated. At that time, one is shifting the heating load of the water heater to the furnace - which may or may not be more cost effective. I think the water heaters are great - esp if they can work out the reliability problems (which I think are teething pains, not inherent problems). I stick by my assertion that there are three applications whereby they produce the most system efficiency / cost effectiveness.

From what you write, you may know this already, but an electric WH is wired so that the top thermostat is the one that takes the lead, heating the top half of the tank for a quick recovery. Any time the top water is below its setpoint, the top element is on and the bottom one is not. The top thermostat is actually a double-throw switch. Once the top thermostat is satisfied, you have half a tank of hot water. The top thermo reroutes the incoming power from the top element to the bottom thermostat. The bottom thermostat then hammers the bottom element until it's satisfied, then it shuts off. Now you have a full tank of hot water. This allows you to have 2 high power (4500 Watt or whatever) elements but a WH that never uses more than 4500 Watts. It sounds like your tests seemed to show the elements and thermostats working right. Now you need to actually monitor what the upper and lower elements are doing while the tank is in operation. This requires working with hazardous voltages, so while I don't want to offend you by suggesting anything, I have to say right here that if you don't know electricity and electrical safety by heart, you should turn this over to a qualified service technician. That warning out of the way, this is pretty easy to test with the access panels off,; insulation peeled back; and neon test light, DMM, or Wiggy at the ready. For something like this I'd probably connect a test light to each element with insulated clip leads, so I could watch the transition from top to bottom element happen (or not happen). My guess: you'll find that the top thermostat's contact that closes on temp rise, the one which transfers power to the bottom element, is not closing properly or consistently., Another possibility is that although the bottom element measures the right resistance for 4500-5000 Watt WH, and the top thermo is working right, the wiring between top and bottom elements has failed. Probably close to 50 years ago, I rewired a WH on which that had happened. Maybe the wire that failed had been nicked when it was pulled in at the factory or something, but for whatever reason, it had burned in two about 1/3 of the way from top port to bottom port. Let us know how you make out with this.

I don't think that is a patch. It looks like black mold. What is happening is in the winter the warm air is condensing against the cold roof deck and creating the mold. Fortunately it is only in the that one spot so it suggest the attic has good ventilation. Even if the hot water heat was twice the size it would not have moved that much. It is possible during the renovation the hot water heater was moved to make more space for something else. It is hard to tell from the photo, but that does not look like a B vent pipe. The B vent is has a small air gap around to perimeter to the exterior cool. The materials are not expensive. Here is piping available at Home Depot. I suggest you have this done properly and not have to worry about it for as long as you live in this house.