California's single-family residential building stock is dominated by gas-fired storage water heaters. This is a result of the building energy efficiency code. For decades the water heater energy consumption calculated in the budget compliance tools has made it hard to justify using an electric resistance water heater. As a result very few electric water heaters have been installed. The compliance tools were written in a way that poorly calculates the hot water load and the calculated time of water heater energy use does not account for the buffering effect of a storage tank. An important part of the budget calculation uses a time dependent valuation of electrical generation to capture the societal costs of using electricity for every hour of a typical year. Meaning the actual effects of the time difference between the hot water use and the energy consumption of electric storage water heaters are not being evaluated properly. The combined effect of these oversights has inadvertently blocked adoption of heat pump water heaters in new construction in California, a major obstacle for reaching the state's net-zero energy and greenhouse gas emission targets. This paper describes the way the building energy efficiency code currently calculates the water heater energy budget. Problems in the calculation procedure are explained. Our knowledge about residential hot water systems has increased greatly in recent years, significantly improving our ability to characterize these systems. Revisions to the building code calculations are suggested based this increased knowledge. An enhanced hot water load calculator has recently been adopted by RESNET. Detailed field studies over the past several years of residential hot water draw patterns provide a source for more realistic draw schedules to use in the calculations. An open source water heat simulation model developed for utility incentive programs in the Northwest could be adapted to calculate the amount and timing of energy use. The role of demand response controls to reduce the impact of electric heat pump water heaters on the grid are also discussed.