Did you know that water heating is the 2nd largest contributor to your utility bills? The type of water heater you have can greatly impact your utility costs. Understanding the different types of water heaters and how they operate can save you money when building or remodeling your dream home. While there are several different options to how you heat your water, I want to outline a few key things you need to keep in mind while making your decision. Described below are the three primary water heating categories.