THE SHORT VERSION
- The most useful number on the label is “Estimated yearly energy use” in kWh or therms. Multiply it by your own utility rate for a realistic yearly cost.
- The big dollar figure uses the FTC’s national prices, currently 14¢ per kWh and $1.21 per therm, set in January 2023. Today’s DOE averages are higher (17.22¢ and $1.43), so most labels understate current costs.
- The cost range only compares heaters of the same fuel and the same usage bin. It can’t tell you whether gas beats electric.
- The label shows first-hour rating, not UEF. Find the Uniform Energy Factor on the spec sheet, the AHRI directory or the ENERGY STAR listing, and compare it only within the same bin.
- Tanks are rated by first-hour rating (gallons in a busy hour); tankless units by maximum flow at a 67°F rise. Neither tells you performance in your winter water.
What each part of the label tells you
The Federal Trade Commission’s Energy Labeling Rule (16 CFR Part 305) sets what goes on the label and where. For water heaters, section 305.17 requires the fuel and type, the capacity, an estimated yearly operating cost, a cost range for similar models, the yearly energy use, and a fixed statement explaining the comparison. Reading it top to bottom:
- 1. Type and tank size
- Fuel and type (for example “Water Heater – Natural Gas”) and, for storage heaters, the rated storage volume. That can be less than the size in the model name: Rheem’s example label for its 65-gallon ProTerra heat pump shows a tank size of 59 gallons.
- 2. Estimated yearly energy cost
- The heater’s yearly energy use priced at the FTC’s national average rate. Good for ranking similar models; not a forecast of your bill.
- 3. Cost range of similar models
- The lowest and highest yearly costs among models of the same fuel and the same usage bin, with a marker showing where this model falls. Further left is cheaper to run.
- 4. First-hour rating and bin
- For tanks, the gallons of hot water the heater can deliver in an hour starting full. It decides the usage bin (very small, low, medium, high) that the heater is tested and compared in. Tankless labels show a gallons-per-minute rating instead.
- 5. The fine print
- Names the comparison group (for example “models fueled by natural gas with a high first hour rating (75 gallons or more)”) and the national energy price used for the dollar figure.
- 6. Estimated yearly energy use
- kWh for electric models, therms for gas. This is the number to multiply by your own rate.
Which heaters carry one
The rule covers residential storage heaters (gas up to 75,000 Btu/h, electric up to 12 kW), instantaneous (tankless) heaters (gas up to 200,000 Btu/h, electric up to 12 kW) and heat pump units drawing up to 24 amps at 250 volts or less. Labels on electric tankless units go on the packaging; other labels are stuck on the heater, generally at the upper-right front. Retailers selling online must show an image of the label for each model.
The yearly cost uses a national price, not yours
The dollar figure is the yearly energy use multiplied by a national unit price the FTC fixes in Appendix K1 of its rule. The current prices, based on DOE data published in 2022, took effect for labels in January 2023. DOE’s newer 2025 averages are higher, so a label printed today understates the national-average cost.
| Energy | Older labels | Labels since Jan. 2023 (FTC App. K1) | DOE 2025 average (published 2026) |
|---|---|---|---|
| Electricity | 12¢ per kWh | 14¢ per kWh | 17.22¢ per kWh |
| Natural gas | $1.09 per therm | $1.21 per therm | $1.43 per therm |
| Propane | $2.41 per gallon | $2.23 per gallon | $2.35 per gallon |
Sources: 16 CFR Part 305 Appendix K1; Rheem, “Understanding Your 2023 Water Heater EnergyGuide Label” (older and updated label prices); DOE representative average unit costs, Federal Register 2026-05899.
Take the hypothetical gas tank in the diagram. Its label shows 269 therms, so the label cost is 269 × $1.21 = $326. At DOE’s 2025 average of $1.43 it is $384, and at $1.80 a therm it is $484. The therms didn’t change; only the price did. That is why the yearly energy use is the number to carry into your own math. Our guide to what a water heater costs to run walks through it with state prices.
UEF: the efficiency rating behind the numbers
The Uniform Energy Factor (UEF) is DOE’s efficiency metric for residential water heaters. It replaced the old Energy Factor in 2017. Think of it as the share of the energy a heater uses that ends up in the hot water you draw, over a simulated day that includes heat lost while the water sits. A UEF of 0.63 means about 63% gets to your taps; a heat pump can exceed 1.0 because it moves heat from the air rather than making it.
The bin matters because a heater does better or worse depending on the workload. DOE’s minimum standards show it: under 10 CFR 430.32, a gas tank with a rated volume of 40 gallons must reach a UEF of at least 0.58 if it tests in the medium bin, but 0.64 if it tests in the high bin. DOE’s consumer guidance puts it plainly: a heater’s UEF can only be compared with heaters in the same bin.
| Heater type | Typical or minimum UEF | ENERGY STAR requires |
|---|---|---|
| Gas storage, 20–55 gal | Federal minimum depends on bin and size (about 0.58–0.64 at 40 gal) | UEF ≥ 0.81 (medium bin) or ≥ 0.86 (high bin); FHR ≥ 51 gal |
| Gas tankless | Federal minimum 0.81 (units over 50,000 Btu/h) | UEF ≥ 0.95 and max flow ≥ 2.8 gpm at a 67°F rise |
| Electric storage, 20–55 gal | About 0.93 (federal minimum) | Not certified unless it is a heat pump |
| Heat pump, 240 V integrated | ENERGY STAR models typically 3.3–4.1 | UEF ≥ 3.30; FHR ≥ 45 gal |
| Heat pump, 120 V / 15 A | Varies by model | UEF ≥ 2.20 |
Sources: 10 CFR 430.32(d) federal standards for heaters made before May 6, 2029; ENERGY STAR Residential Water Heaters Key Product Criteria; ENERGY STAR, “What is Uniform Energy Factor and Why Does it Matter?” (traditional heaters 0.63–0.95, certified heat pumps 3.3–4.1).
First-hour rating vs. maximum flow
Tanks and tankless heaters are rated for capacity in different ways, because one stores hot water and the other makes it on demand.
First-hour rating (tanks and heat pumps)
Good
- Gallons of hot water delivered in one hour, starting with a full, hot tank
- Combines stored water and recovery speed
- Printed on the label and spec sheet
Watch for
- Measured at a 3 gpm draw with 58°F inlet water; your winter water may be colder
Best for: Matching against your busiest hour of hot water use.
Maximum flow (tankless)
Good
- Gallons per minute the unit can deliver over a 10-minute test
- Measured at a 67°F rise (58°F to 125°F)
Watch for
- In colder water the rise is bigger and the flow drops
- One number; manufacturers’ flow charts show the rest
Best for: Checking how many fixtures can run at once.
The federal test procedure defines first-hour rating as an estimate of the most hot water a storage heater can supply in an hour that starts fully heated. In the test, water is drawn at 3 gallons a minute; each draw stops when the outlet temperature falls 15°F below its peak, and the next starts when the burner, element or compressor finishes reheating. Two 50-gallon heaters can therefore score very differently: a 40,000 Btu/h gas tank from Bradford White is rated at 89 gallons, while Rheem’s 50-gallon electric Performance Plus is rated at 62.
A tankless unit’s maximum flow is measured with the same 58°F inlet and 125°F outlet, so it describes a 67°F rise. Where your incoming water is colder than 58°F, as it often is in northern winters, the rise is bigger and the unit delivers less. Our sizing guide shows how to read a manufacturer’s flow chart at your own temperature rise.
How to use the label when comparing heaters
Check capacity first
Make sure the first-hour rating (tank) or flow (tankless) covers your busiest hour. A cheap-to-run heater that runs out is not a bargain.
Within one fuel and bin, compare the cost bars
Two gas tanks in the high bin can be compared directly: the one further left on the range, or with the lower yearly energy use, costs less to run.
Across fuels or types, redo the math
Multiply each model’s yearly kWh or therms by your own per-unit rates. That is the only fair way to compare a gas tank with a heat pump.
Look up the UEF
Find it on the spec sheet or in the AHRI Directory or ENERGY STAR product finder. ENERGY STAR certification, which some rebates require, sets UEF minimums by type.
Ask for these on every quote
- Exact brand and model number of the heater being installed
- First-hour rating (tank) or maximum flow at a 67°F rise (tankless)
- UEF and the usage bin it was rated in
- Estimated yearly energy use in kWh or therms
- Whether it is ENERGY STAR certified, if a rebate depends on it
With those figures you can compare quotes on the heater as well as the price, and check whether a model qualifies for rebates.
Common questions
Where is the EnergyGuide label on a water heater?
The FTC rule says it should generally sit on the upper-right front of the heater. Electric tankless labels are printed on the packaging. If it’s gone, look the model up in the AHRI Directory or on the spec sheet.
Is the yearly cost on the EnergyGuide label accurate?
It is accurate for the test conditions and the FTC’s fixed national prices (14¢ per kWh, $1.21 per therm since January 2023). Your bill depends on your rates and hot water use. Multiply the label’s yearly kWh or therms by your own per-unit price instead.
What is a good UEF for a water heater?
It depends on type and bin. Most gas and electric tanks fall between 0.63 and 0.95; ENERGY STAR asks 0.81–0.86 for gas tanks, 0.95 for gas tankless and 3.30 for 240-volt heat pumps. Compare UEFs only within the same fuel and bin.
Why doesn’t the label show the UEF?
The FTC rule sets the label’s content, and UEF isn’t on the list; capacity, yearly cost, cost range and yearly energy use are. The UEF is on the spec sheet, in the AHRI Directory and in ENERGY STAR listings.
What does first-hour rating mean?
The gallons of hot water a storage heater can deliver in one hour starting from a full, hot tank, measured in DOE’s test at a 125°F outlet. It combines tank size and recovery speed, which is why it is a better sizing number than the gallons in the model name.
Do heat pump water heaters have an EnergyGuide label?
The FTC rule’s definition includes heat pump units drawing up to 24 amps, and manufacturers do publish labels for them, such as Rheem’s for its 65-gallon ProTerra. DOE’s consumer guidance said the label isn’t required on heat pump models, so if one is missing, use the spec sheet or ENERGY STAR listing.
Sources
Sources checked October 5, 2026. Prices, codes and rebates change. Check current details with your installer and local permit office.
- 16 CFR 305.17: label content for water heaters ↗ · Federal Trade Commission, via Cornell LII
- 16 CFR Part 305 (Energy Labeling Rule), full text incl. 305.3 definitions, 305.13 placement, 305.27 online disclosure, Appendices D1–D5 ↗ · Federal Trade Commission, via eCFR
- 16 CFR Part 305, Appendix K1: unit energy costs for labels ↗ · Federal Trade Commission, via Cornell LII
- 10 CFR 430 Subpart B, Appendix E: uniform test method for water heaters ↗ · Code of Federal Regulations, via Cornell LII
- 10 CFR 430.32(d): energy conservation standards for water heaters ↗ · Code of Federal Regulations, via Cornell LII
- Representative average unit costs of energy (2025 prices, notice 2026-05899) ↗ · U.S. Department of Energy, Federal Register
- What is Uniform Energy Factor and why does it matter? ↗ · ENERGY STAR
- Residential water heaters key product criteria ↗ · ENERGY STAR
- Estimating costs and efficiency of storage, demand and heat pump water heaters (archived copy, May 2026) ↗ · U.S. Department of Energy, Energy Saver
- Sizing a new water heater (archived copy, July 2026) ↗ · U.S. Department of Energy, Energy Saver
- Understanding your 2023 water heater EnergyGuide label ↗ · Rheem
- EnergyGuide label, Accelera 300 E heat pump water heater (older Energy Factor label) ↗ · Stiebel Eltron
- Water heater EnergyGuide labels (AHRI Directory pointer) ↗ · State Water Heaters
- Residential atmospheric vent gas water heaters spec sheet (RG250T6N) ↗ · Bradford White, hosted by Young Supply
- Performance Plus electric water heater spec sheet ↗ · Rheem, hosted by Home Depot