Set the temperature on water heaters to 120°F, and install an insulating blanket on the water heater (which should pay for itself in less than a year). Consider replacing old units with an ultra-efficient heat pump water heater. Heat pump water heating technology is up to three times more efficient than standard natural gas, propane or electric resistance water heaters.

For more details about heat pump water heating visit: Energy.gov's page on heat pump water heaters