How We Cancelled Our Water Heater Rental and Installed Our Own Tank

When we bought our current house it came with a water heater tank rented from (then) Enbridge. Soon after the rental contract was shifted to Direct Energy. No one changed the tank though. It was ancient and getting older. Eventually we cancelled our water tank rental and had our own tank installed. Here’s why.


Ancient Water Heater Tank Struggles On

According to the information on the side of the tank, our water heater was installed by Consumers Gas in August 1991. We live in an area with hard water so goodness knows how much scale had deposited in the tank over the years. I have no reason to believe the previous owners had followed the required maintenance practice of flushing the tank regularly. (A neighbour whose tank finally failed found there was over a foot of solid scale at the bottom when the tank was cut open.)

I started hearing stories from relatives and friends of tanks of this age suddenly failing, often when the owners were away. Often their basement was damaged by flooding. Our tank is in an unfinished part of our basement with a clear short run to the floor drain but even so it made me nervous to hear.

Rent Versus Buy for a Water Heater Tank

I knew I wanted our tank replaced before anything nasty happened.

At that time, we were renting the tank for $14.93 per month (including the HST.) Yes, we were paying almost $180 a year for a tank that was almost 20 years old!

It was not necessarily going to be easy to convince Direct Energy to replace the tank because it wasn’t broken yet. If we could convince them, we knew the rental cost per month would increase.

The other option was to buy and install our own tank.

Checking Prices and Warranties

We did a bit of scouting around online looking at prices and warranties. To be honest, we could have spent more time and been more thorough. But we saw an offer that looked good and went with it.

Home Depot at that time was selling 40 gallon natural gas water heater tanks with three levels of quality. A 6-year tank, a 9-year tank and a 12-year tank. From reading reviews and consumer information, it appeared that usually the difference between tanks is the thickness of the walls and parts and the use of one or more sacrificial anodes. All of these things are intended to increase a tank’s life by slowing down how quickly it rusts out. Since we wanted a tank that could last as long as possible (since labour costs are a big part of tank replacement costs) we went with the 12-year tank. (If they’d offered a longer life we probably would have bought it.)

The warranty offered by Home Depot if you had the tank installed by their Installation Services department was great. For the 6- and 9-year tanks, the tanks and functional parts were only guaranteed for the 6 and 9 year expected life, but the labour was also covered. For the 12-year tank, the warranty covers the tank and functional parts and LABOUR not just for 12 years, but for life! Their tagline is “The last hot water heater you’ll ever buy!”

Do we realistically expect to be able to hold Home Depot to that warranty if the tank has problems in, say, 15 years? No. But it sounds great on paper! (We do have a copy of the information in writing but I suspect there is some way it can be weaseled out of.)

What this warranty really suggests to me is that the tank is probably of a reasonable quality.

Installation Is Easier for a Replacement Water Heater Tank

Our installation costs were not that high. We were replacing a natural gas water heater tank with another of the same. Due to some changes in the shape and height of tanks over the years a small amount of pipefitting adjustment was needed. However the actual gas lines were already in place, etc, which means the required work was minimal.

What Did It Cost to Replace our 40 Gallon Natural Gas Water Heater Tank?

All in, taxes, delivery, tank, installation, and removal of the old tank from the basement to the great out of doors, cost us $910.90. Probably not the best deal available but it was acceptable to us.

What Did We Do With Our Old Tank?

Believe it or not, Direct Energy wanted back the old tank! When I phoned them to cancel our rental they told us they would pick up the tank for free or we could deliver it to one of their depots. (There may be a cost now for tank pickup. Check your contract.) We opted to have them pick it up.

Ever mindful of the horror stories I read in The Star about water heaters I didn’t really relax till they picked it up about a week later. I even kept a tarpaulin over it to keep the snow off just in case. Fortunately in my case there was absolutely no problem with Direct Energy.

When Will We Payout the Water Tank?

The rental cost for our old tank was $12.99 per month plus HST, so just over $14.93 per month. At $179.26 per year the payout on the new tank would take a long time: about 5 years.

It’s important to remember though that the reason we replaced the tank was

  • we thought it would leak and damage our basement at any time
  • the rental fee for a new tank would be much higher

 

At the time, a new rental from Direct Energy would be about $25 per month. At that rate, the tank would payout in about 3 years.

Yes, technically I should include the value that money could have earned if invested. I didn’t. I’m mathematically lazy.

Having Control of My Water Heater Costs Appeals to Me

I’m a control freak. I enjoy feeling in control. I like knowing that no one can arbitrarily raise the cost of my water heater.

Do We Regret Buying Our Own Water Heater?

We had our water heater installed in December 2010. Two and a half years later it’s still working well. So we’ve almost paid it out. After December if it breaks and we have to pay to replace it, we’ll be no worse off than if we rented. If it doesn’t break, we will start saving money each month versus renting.


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Do you own or rent a water heater? Is it a tank or a “tankless” system? Please share your views with a comment.

28 thoughts on “How We Cancelled Our Water Heater Rental and Installed Our Own Tank

  1. Thank you for this anecdote. We are in the same position and appreciate the information re water heater tanks.

    • Replacing our water heater with one we purchased has turned out to be a good idea. It’s lasting well so far. It may be worth checking for reviews etc on the tanks that are available for sale now. From what we read, the longer the warranty on the tank (12 or 15 years for example) the better the construction should be. Good luck whichever route you choose!

  2. We went through hell trying to get a well known water heater rental company to remove their water heater. After months of being lied to, given the run around, etc. we finally went to The Ministry of Consumer Services and filed a formal complaint in accordance with the Consumer Protection Act. We also went to the BBB (who did nothing to help), and contacted Marketplace (consumer advocacy television series). Fortunately, I had tape recorded 4 months worth of conversations in which the water heater rental company was blatantly lying, misleading, and frustrating us as consumers. We were prepared to take the company to court, but thankfully they finally picked up their water heater. We’ve been owning for seven years now and it’s been great. No problems and much cheaper.

    • Wow! I’m sorry you had such a fight to return the old tank. We were lucky with that step. Glad to hear your new tank is a better solution. We’ve been happy with ours, too.

  3. Our current rent for a HTW with Reliance is $89 every three months. I would like to simply buy out the tank and keep it. Is this possible and how is this done without too many issues.

    Note: The tank date shows 1999, lately its been knocking and making strange sounds when running. Since it heats our entire home (infloor radiant heat) I don’t want it failing during the winter. Midyou the tank could last a few more years. I fell the $89 is too high and buying it out at that age shouldn’t be too costly, then just have a new one installed by a local company we trust. Comments welcome, thanks.

    • It is possible. You’d have to check with Reliance to determine all of the costs.

      Personally, if the tank doesn’t seem 100% reliable, I would get a new one. It would cost you more in the short run but might give you peace of mind. I’m not convinced a tank from 1999 is that much better made than a tank made today. (One from the 1980s though is much better made.)

      We took the plunge and gave ours back to the company and bought and had one installed through Home Depot. It’s now years later and we still feel it was the right choice for us.

      I see you’ve had lots of useful feedback already from the Canadian Money Forum. Whichever decision you make I think you’ll be happier than you are paying the $89/3 months. Keep us posted on what you decide!

  4. I have had nothing but a nightmare dealing with consumers. On Dec 27 2014 my 18yr old rental ruptured flooding my basement so I contacted consumers about replacing my water heater i was being charged $28.80/ mth to rent. When they came to replace it they wanted me to sign a 15yr rental contract, being that that would amount to paying roughly $5000 for a $900 heater i declined & had my own installed & so my nightmare began. When i called to have them pick up their heater they gave me a date SIX WKS LATER to pick it up. When they came in FEB their workers said there was too much snow to pick it up & rescheduled a pick up in Mar. When that came they showed up AFTER their 4hr window i had waited for & had left for work. So again another pick up was set for April. When they came in April they said the tank wasn’t drained, when i showed them the drain was open they said because of the age rust had clogged drain then kicked off the drain & again rescheduled pick for May. Thankfully then it was finally picked up now the kicker they’re demanding i pay rental from Dec to May for the heater than they deemed scrap & I had no use of that they themselves refused to pick up! INCREDIBLE SCAM TO EXTORT MONEY from someone who refused to sign a 15yr contract

    • Wow! That is really a nightmare. I’m very sorry you experienced all that. Our cancellation went much more smoothly but it was with Enbridge.

  5. Water heater from Reliance is more than 11 years in this house which I bought in 2012. I have signed no any agreement with reliance but only continued rental payments.Now i asked to remove it .They are sending me options to pay $150.00. I requested for removal from renting,They are asking a big price for this garbage.
    Badly trapped,
    MAYO

    • Unfortunately those rental agreements do have big fees for “early” termination. Since water heaters are meant to last for 15-20 years, they are going to claim you are removing a heater that still has life left so you owe them money. I don’t know if there is any way out of that; I haven’t heard of anyone who did not have to pay that removal/end of contract fee. Sorry!

  6. How has the government not stepped in yet? ******* is the supplier for [builder’s name] and they are charging $40/month. How is tied-selling into a rental for a water heater an acceptable business practice? [Builder’s name] should choose a better supplier or just include it with the purchase (they are still trying to recover since the last class action).

    • I doubt the government will intervene as the water heater is part of the contract each time a home is sold. A buyer has the right to refuse to accept the rental and to demand in the offer of purchase and sale that it be removed before purchasing. Most buyers, however, don’t even realize there *IS* a rental until it’s too late and they have signed their final purchase agreement offer. And yes, the Seller can refuse to remove the rental simply by refusing to state in the offer that they will return the rental to the energy company before the closing date. There are many buyers who will accept the rental so the seller has little motivation to agree to its removal.

      It would probably take a large-scale revolt on the part of buyers to get a new home builder to switch their water tank supplier if they find it financially better to choose one supplier over another.

  7. I bought a resale home, and there is a 5 year old water heater in the home.

    Enercare (formerly Direct Energy) doesn’t give me the option to return the water heater since they changed the agreements on 2010, and any water heater that was purchased after 2010 has only the buy out option.

    They ask $1,250 after tax for a Power Vent 60, Gas, 5 years old.

    Does it sound normal to anyone?

    Is there anything I can do to reduce the buy out price?

    Thanks

    • I’m sorry to hear you’re getting a rough ride from Enercare. You may want to post on a consumer forum like RedFlagDeals and see if anyone managed to talk them down on the buy-out price. The problem is that they have all of the power in the contract negotiation so it would be difficult to get them to drop it. I wish I had some positive advice to offer. Sorry!

  8. OMG what kind of farce is going on in ontario
    why would anybody rent a hotwater heater
    in b.c. a new electric is approx 400.00 and a gas is about 1100.00 they last at least 10 to 15 years…your getting royally screwed over there, looks like they overcharge for heaters there too,,,cant believe the government allows that kind criminal act to go on

  9. Hi,
    I thought a new regulation was passed where customers can return (deliver) the water heaters to the vendor and there will be no charge. In fact, one of my relative who bought a new home 3 years ago claims that he did return it with no charge or penalties.
    How much of this really is possible?

  10. I recently bought a new house,when I sign the purchase with the builder it only states water heater rental
    since I am use with reliance on my old house for $15/month I did not think it was a tank less water heater.
    Yesterday received a letter from sandpiper with a contract for me to sign for $44.95/month plus taxes, for 120 months
    I called them and ask if I have an option to buy and they said yes for $4095,00 plus taxes, I find this to high and, I said about if I do not sign this contract, they will get back to me, but I think they are trying to delay I have 10 days to sign after I received this letter.
    To me this is a scam the builder should state in the agreement what type of unit and the cost to rent.
    What type of saving energy for120 months is a cost of $6000.00 with taxes I can buy lot of water heaters
    Please send your comments.
    Thanks

    • I’m sorry you’re getting treated poorly by your builder. Unfortunately, I know almost nothing about heaters or what is a good deal. Perhaps you could talk to some other buyers in your new subdivision and see if you can do something as a group? I wish I could offer some help but I can’t think of anything.

    • A good quality tankless one goes for around $ 3,000 + taxes fully installed. I am talking about one of the high end ones. Not sure which one Reliance has installed in your house. But in any case the buout is expensive, the rental even MORE expensive. Tankless v/s Tank you won’t really save much in gas costs, so don’t expect big savings in energy costs.
      Only advantage is that Tankless is less space, generally lasts longer than tank ones, endless water supply.

  11. I am in a new home in ajax, my water rental is $45 per month. To buy out they said $4000 (or a little less); I have been paying the fees for the last two years. Now I am thinking of asking them to pick it up and go through a big box builder and pay them to install a tank-less or a standard $800 water heater.

    Has any one else done this in Ajax?

    • I hope someone replies to your question. We got rid of our tank in Mississauga but it was much older than yours. We’ve now had a “free” hot water tank for over 2 years, since we have saved the cost of delivery, installation and removal of the old tank to the yard, in monthly rental fees that we do not have to pay any more.

    • Yes you can do either or. Buyout or ask them to pick up the old one. In case of pickup they will charge you removal fees, pickup fees etc. Usually around $ 200 for that. $ 45 per month is insane rental fees if its a tank one, even for tankless ones its on a higher side.

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