We get these questions all the time. The only quick answer is one of hydronics wizard Dan Holohan's favorite replies: "It depends."

The most useful answers can be given if the questions tie into the broader context of getting the most from the whole water-heating system. People already know they should look for energy efficiency from the heater itself. But additional savings can be found in water distribution, equipment sizing and selection, and maintenance.

During the assessment, find out if there are any complaints about performance, such as hot water delivery time, temperature fluctuations, or amount of hot water. This could be an opportunity to solve those problems, resulting in greater satisfaction with energy conservation measures. And remember always to keep safety in mind. Water heaters still blow up and cause fires, and people continue to get scalded by hot water and poisoned by carbon monoxide.

When you've determined what's already there, consider the following information and select the options for water heating and distribution that best suit the situation.

If the old heater is leaking, replace it. That's a straightforward decision. But if it's not leaking, what criteria will help you decide whether or not to keep it? Age alone is not the deciding factor. In fact, older tanks often have the advantage of being more sturdily built.

But tanks do deteriorate with age. You will need to inspect the water heater to determine if it is a good candidate to keep and maintain. A tank's age is usually encoded in its serial number. If it begins A-83 or 0183, the tank was built in January 1983. B-83 and 0283 mean February 1983, and so on. If it begins 8301, the tank was built in the first week of 1983; 8352 would mean the last week of that year. Knowing the tank's age is a start.

Inspect all tank fittings to get more information. Do you see any signs of rusting or leakage? Look into the combustion chamber and the flue of fuel-burning units. (A flashlight and an inspection mirror are a big help.) While slight rust or water marking from condensation are not a problem, heavy rust and water streaks are danger signals. A pile of rusty scale on top of the burner suggests that tainted air has damaged the flue.

Another indicator for both gas and electric heaters is the sacrificial anode rod. (This rod "sacrifices" itself to protect the tank.) Although it can be difficult to remove, the effort is worthwhile, because the anode provides the best clue to conditions inside the tank. The sacrificial metal (magnesium or aluminum) is formed around a steel core wire. Normally, the anode slowly corrodes away to protect the heater from rust. When enough metal has corroded away to expose 6 inches of the core wire, it's time to replace the anode. So if you pull out an anode and find little or no sacrificial metal left, some damage will have occurred in the tank.

If your inspection of fittings, combustion chamber, or anode suggests that the tank has undergone substantial damage, replacement is a reasonable choice.

Perhaps you found little or no evidence of tank deterioration. Then, assuming the tank has insulation and is correctly sized, the most cost-effective thing to do is probably to keep it going. But, you may be thinking, what about energy use? The main difference between most old and new heaters in terms of energy performance is the insulation level. Atmospheric combustion and immersion heating elements haven't changed a lot. So insulating blankets, heat traps, and pipe insulation can help keep heat where it should be and help old heaters perform more like new heaters.

Whether you keep the old heater or replace it, maintain it regularly (see "Water Heater Maintenance Combats Tank Failure"). This will avoid the cycle of replacement, saving the energy needed to produce new equipment and dispose of the old.

Choices abound in ways to heat water. In some situations, a tankless heater may be the best option (see "Tank-type versus Tankless"), but tank-type heaters suit most installations.