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Q–My wife tells me that we should be just as concerned about the efficiency of our hot-water heater as we are about the efficiency of our forced-air furnace. We have an older hot-water heater and I have no idea how efficient it is. Are there are other steps we can take to save energy on the hot-water heater? And are they worth it?

D.B., via email

A–Your wife has hit on an important point. Hot-water heaters, especially older, less-efficient models, do consume a decent amount of energy. They’re often the second most energy-hungry appliance in your home–following your heating/air conditioning unit. This is especially true if you have an electric hot-water heater.

As with a furnace or boiler, there’s always room for improvement.

Let’s start by addressing the hot-water heater itself. If it’s older than 10 years old, it probably would be beneficial from an energy-savings standpoint to replace it.

New hot-water heaters burn less energy to heat water and the tanks are better insulated.

While it might cost you several hundred dollars to replace your existing unit, you’ll immediately shave money off your monthly gas bill. Depending on usage and size of the unit, it could take anywhere from a year to several years for the hot-water heater to pay for itself. Then, the monthly savings stay in your pocket.

There are several important factors to consider when purchasing a new unit. Try to get the most efficient unit possible. Check for an Energy Star label, which is a seal of approval from the U.S. Environmental Protection Agency and Department of Energy. It distinguishes an appliance as the most energy-efficient in its class.

Also, check for the yellow and black Energy Guide label. That will spell out the unit’s estimated annual energy consumption and operating cost.

Next, purchase a properly-sized unit. An oversized hot-water heater will waste your energy dollars by heating unused water.

You may also want to relocate the unit to shorten the pipe runs to the bathrooms, kitchen and laundry area. This will cut heat losses in the pipes and your energy bill.

Some families find it best to replace one large heater with two smaller ones, especially if the kitchen and laundry area are on one side of the house and the bathrooms are on the other. This setup assures a constant supply of hot water, even if you’re running the washing machine while someone is taking a shower.

If you’re planning to stick with your existing hot-water heater, there are still a number of things you can do to cut energy usage.

First, make sure the unit’s thermostat is properly set. Turn on a hot-water tap and use a thermometer to gauge how hot the water is. If it’s 145 degrees or hotter, turn down the thermostat. An ideal setting is about 135 degrees. If you have a separate hot-water heater for a shower and bath, you can try turning down that thermostat even lower.

Next, consider insulating the hot-water heater and the hot-water pipes in your home.

Home improvement stores offer hot-water heater jackets that can minimize heat losses from these appliances–especially those located in cold basements. If your hot-water heater is located in an even colder garage, you may also want to consider building some sort of closet around it to protect it from drafts.

You also can buy pipe sleeves to insulate the horizontal and vertical hot-water pipes coming from the heater.

It also pays to repair leaky faucets. A dripping faucet can waste up to two gallons of water a day or more than 700 gallons a year. You pay good money to buy and heat those 700 gallons.

Also, cut hot water usage by installing low-flow shower heads and, whenever possible, washing clothes in cold and warm water with a cold-water detergent.

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Got a question about home energy or home environmental issues? Write to Energy Q&A, Chicago Tribune, Your Place section, 435 N. Michigan Ave., 4th Floor, Chicago, Ill. 60611. Or you can e-mail energy qa@aol.com.