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The answer seems fairly obvious, but maybe I am wrong. Many water heaters have extension pipes plumbed into the pressure relief valves. I'm assuming that this is to keep hot water from spraying around if the valve opens: T&P Water Heater Extension

On the water heater in my garage, the pipe runs to a little bit above the floor and then ends. This seems like the normal correct way to do this. At my uncle's house, however, I noticed that the plumber soldered a cap on the end of the extension pipe. This seems not only wrong, but potentially dangerous as the valve will simply open into a closed pipe which has no way to actually relieve the pressure of the valve it was installed for in the first place. Is this as wrong as it seems, or a completely normal installation?

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The temperature and pressure relief valve, and any piping it is connected to (copper or CPVC only, at least 3/4" ID), should never be blocked, capped, or obstructed. You should remove that cap because, as you correctly surmised, it is a danger if the T&P valve were to open. A simple tubing cutter like the one shown below will work just fine to cut that cap off.

Home Depot

A note on your install, or at least the install depicted in the picture - the T&P discharge pipe should not terminate inside the drain pan. It should terminate no more than 6" above a properly-sized floor drain, or outside (unless freezing is a concern, then you should drain it inside).

Your water heater manual specifies all of these instructions as well.

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  • Thank you for the clarification on the drain pan. I actually just grabbed that picture off of google just to illustrate what I was talking about.
    – Secundus
    Jul 10, 2017 at 18:38

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