Cut Your Hot Water Bill: Four Fixes and One to Skip

Leave the tank thermostat alone. Lowering a storage tank’s temperature below 60 degrees C is the one popular saving that isn’t safe, and it’s a common tip online.

The real savings are in using less hot water, losing less heat on the way to the tap, and heating at the right time. Four fixes do that. One tip doesn’t, and it’s the one to skip.

The test for any hot water saving

Ask one question of every tip: does it make you use less hot water, lose less heat, or pay less per unit of energy? If it does none of those, it isn’t a saving. It’s a change that looks like one.

Skip: lowering the tank temperature

A storage tank has to hold its water above 60 degrees C to stop Legionella bacteria growing, according to the Building and Plumbing Commission in Victoria. The same guide says a tempering valve keeps the water at the tap at or below 50 degrees C, which limits scalding without turning the tank down.

So the thermostat is a safety setting, not a budget dial. Systems installed before 5 August 1998 are unlikely to have a tempering valve. If you don’t know whether yours does, a licensed plumber can tell you and fit one. Rules differ by state, so this is the Victorian position, and it’s worth checking where you live.

Fix 1: use less hot water

The first lever is volume. Water-efficient showerheads and taps cut the volume that goes through the heater, and the heater has less to do. The Australian Government’s YourHome guide covers both.

Fix 2: stop the small draws

Mixer taps left in the hot position are a quiet drain. YourHome notes that small drawings of hot water often never reach the tap, so the heater has warmed water that only fills the pipe and goes cold again. For a splash of water to rinse a cup or wash your hands, put the mixer in the cold position.

Fix dripping hot taps too. A drip is hot water you’ve paid to heat and nobody has used.

Fix 3: lose less heat

YourHome says about 30 per cent of the energy a storage system uses is wasted as heat lost from the tank and the pipework. That’s the number that makes insulation worth doing.

Two things follow. Keep hot water pipes short where you have a say, such as in a renovation. And wrap the tank in an insulation blanket, with one exception: don’t wrap a gas storage system with a pilot light, because the water can overheat. Follow all safety requirements on the product and on your unit, and ask a licensed plumber if you aren’t sure which type you have.

Fix 4: heat at the right time

Off-peak operation suits electric storage systems larger than 250 litres, according to YourHome. Smaller systems are unsuitable for it and can cost more to run. If your tank is over that size and your electricity plan has an off-peak rate, it’s a question worth putting to your retailer and your plumber. If your tank is smaller, skip this one.

The fair case for the other side

Some households will say the thermostat is the easiest change on the list and the one with the most obvious effect. For a tank set far above what’s needed, with no tempering valve at the taps, they have a point: that setup wastes energy and risks scalds. But the fix there is a licensed plumber, who can sort out both, and not a quiet drop below 60 degrees C by the householder.

The other reasonable objection is that a big upgrade beats a list of small habits. YourHome says a heat pump or a solar hot water system costs more to buy but can be cheaper to run, and that’s a real option for some households. It’s a different decision from the four fixes here, and it doesn’t make them pointless.

What would change this advice

Three things would change what’s best for your house. A tempering valve already fitted at your taps tells you scald protection is in place, so you can put your effort into the four fixes, though the 60 degree floor on the tank still stands. A very old tank is the point to ask a plumber about replacement, which is where a heat pump or solar system comes into the picture. And an off-peak electricity plan paired with a large enough electric tank makes timing worth a closer look.

Without those, the order is simple: use less, lose less, heat at the right time, and leave the thermostat where the regulator says it belongs.

Sources: Building and Plumbing Commission (Victoria), “Hot water safety” (https://www.bpc.vic.gov.au/resource-hub/safety-guides/hot-water-safety); Australian Government YourHome, “Hot water systems” (https://www.yourhome.gov.au/energy/hot-water-service)