Residential storage water heaters are rated in accordance with the Department of Energy (DOE) test procedures (1-3) on the basis of a hot water usage of 64.3 gallons (244 litres) per Most water heaters can provide this requirement in one to two hours of operation per day. For the remainder of the 22 to 23 hours in the day, the water heater operates in a standby mode. Energy must be supplied during standby to maintain the stored water at tank temperature. For a gas water heater, the energy consumed during standby is typically about 30% to 70% of the energy required to provide the daily hot water requirement. The overall efficiency (DOE Energy Factor) of the water heater, taking standby energy consumption into account, is about 60% to 75% of the DOE Recovery Efficiency. If a space-heating load is added to the waterheating load, the overall efficiency of the combination appliance can be increased substantially over the efficiency of the heater when used to heat domestic water only. The net increase in energy consumption for the added load is the energy expended for additional recovery less the displaced standby energy consumption. When considered on an incremental basis, the efficiency of providing the additional hot water for space heating can be demonstrated to be greater than the DOE Recovery Efficiency. In this paper relationships are quantified and a method is presented for determining a space-heating efficiency for the combination appliance that can be used to compare against a space-heating Annual Fuel Utilization Efficiency (AFUE) of a single function appliance.Units: Dual