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Would the pressure release valve going bad on a water heater cause the water heater to quit working?

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No, a water heater will continue to heat the water with a bad TPR valve. A failed TPR valve is a safety issue since the water heater could heat the water to the point that the tank explodes and does significant damage to your home, roof, and probably the home of your neighbors. Several other components would also have to fail for this extreme situation to happen (the thermostat would have to heat beyond the normal cutoff, a check valve preventing water going back into the city water lines needs to exist, and no other valves in the house can be leaking) so it's fairly rare. But with the danger to your life, it's still a good precaution to ensure this valve is properly functioning.

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Aren't T&P valves designed to fail open? – Tester101 Nov 7 '13 at 13:44
Depends on the failure, where the sediment builds up, etc. – BMitch Nov 7 '13 at 14:18
Mythbusters demonstrated this extreme situation (along with the tank being partially empty so steam could build up) with their typical spectacularly horrifying results. – gregmac Nov 7 '13 at 18:57
Even if it fails open, homeowners have been known to cap the outlet to stop the leak. – mikes Nov 8 '13 at 13:45

if you tpr fails the valve closes and the tank gets no oxygen to fire. it will run long enough till the oxygen is depleted. time to get a new tank. thermal protection fuses are very hard to find, you can swap out the tank quicker

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I believe the OP is talking about the temperature and pressure relief valve (TPR, T&P), which in no way has anything to do with combustion. – Tester101 Jan 7 '15 at 17:10

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