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I have never taken apart a hot water heater, but am under the impression that they are now made with glass-lined steel tanks. Does this mean that water heaters should use di-electric unions? What about using a section of brass pipe in place of the di-electric union? Is this an acceptable substitute? My experience are that di-electric unions are marginally usefull at best.
 

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Di-electric unions are only used on gas meters. Gas co. sends a low voltage down it's line to repel moisture/prevent corrosion and the union keeps it from going into the house. Water heaters can be hooked up with straight copper to brass mip or fip adaptors or any other materials (except plain black iron pipe).
 

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In my area (UPC) dielectric unions or nipples are required between copper and steel. Brass transition does not meet the code standards but is usually allowed by the AHJ. Water heaters here are required to have unions no matter what type of pipe you are using. This can be done by using flex connectors too.
 
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