Four states require new electric storage water heaters to be demand response capable: Washington, Oregon, Colorado, and New York. Each does it the same way, by mandating a CTA-2045 communication port on the appliance so a utility module can plug in later. California takes a different route, requiring utilities to offer demand response programs rather than putting a hardware requirement on the water heater itself. If you live in one of the four mandate states, any new electric storage water heater legally sold to you already has the port built in.
Washington
Washington was first. HB 1444, passed in 2019, amended the state’s appliance efficiency standards, and since January 1, 2021 no electric storage water heater can be sold, installed, or offered for lease in the state unless it has a modular demand response port compliant with the March 2018 version of the ANSI/CTA-2045-A standard. The requirement covers both the physical interface and the application layer.1Washington State Legislature. Washington Code Title 19 Chapter 19-260 Section 19-260-080
Oregon
Oregon followed with House Bill 2062 in the 2021 session. Any electric storage water heater manufactured on or after January 1, 2022 must have a CTA-2045-A compliant port meeting both the communication interface and application layer requirements.2Oregon State Legislature. Enrolled House Bill 2062 (HB 2062-A)
Colorado
Colorado passed House Bill 23-1161 in 2023, prohibiting the sale or lease of new electric storage water heaters without a CTA-2045-A compliant port as of January 1, 2024. The statute applies to units with a rated storage capacity between 40 and 120 gallons, a nameplate input of 12 kilowatts or less, and a maximum delivery temperature below 180 degrees Fahrenheit.3Colorado General Assembly. House Bill 23-1161 – Concerning Environmental Standards for Certain Products
Denver layered its own rule on top. The city’s 2022 building code requires CTA-2045 ports on all newly permitted residential electric and heat pump water heaters 40 gallons or larger. Colorado allows local governments to set stricter standards than the state baseline, so if you’re installing in Denver the city rule governs.
New York
New York built the requirement into its Energy Conservation Construction Code, with compliance required as of December 31, 2025. It applies to electric storage and heat pump water heaters sold or installed in the state.
California’s Different Approach
California does not mandate CTA-2045 ports on water heaters themselves. Instead, the California Public Utilities Commission requires investor-owned utilities, Community Choice Aggregators, and third-party aggregators to offer demand response programs that residential, commercial, agricultural, and industrial customers can voluntarily enroll in to reduce their bills.4California Public Utilities Commission. Demand Response The Commission opened a new rulemaking in September 2025 to further develop that framework.
The practical difference for a buyer: in the four mandate states, every new electric water heater ships with the port whether you use it or not. In California, you choose to enroll in a program, and you may need a compatible appliance to do so.
What a CTA-2045 Port Actually Does
CTA-2045 is essentially a standardized socket on the water heater, roughly comparable to a USB port, that accepts a small communication module. The module handles the actual connection to the utility over Wi-Fi, cellular, or smart meter mesh networks. The water heater itself doesn’t need to be “smart”; the intelligence sits in the plug-in module, which can be swapped as communication technology evolves without replacing the appliance.
When a utility sends a demand response signal, the module passes it to the water heater’s controls. The typical instruction is to pre-heat the tank before a peak demand window and then idle the heating elements during the peak. Because a tank of hot water holds its heat for hours, most households don’t notice. The utility reduces load during the most expensive and stressed hours on the grid.
Having the port installed does not mean the utility is doing any of this today. Until you enroll in a program and a module is plugged in, the port is dormant. The Department of Energy’s guidance on smart grid privacy recommends that utilities use household energy data only for core utility purposes like billing and network management, and that any third-party sharing require your affirmative opt-in consent specifying the purpose, duration, and revocation process.5Department of Energy. Data Access and Privacy Issues Related to Smart Grid Technologies
Can the Utility Shut Off Your Hot Water
No. ENERGY STAR’s test method for connected water heaters requires manufacturers to include instructions for overriding demand response requests, and the appliance must accept that override through a local or remote interface. The test protocol verifies that consumers can override multiple times within a sequence of curtailment events, meaning you can opt back in whenever you want.6ENERGY STAR. Connected Residential Water Heaters Test Method to Validate Demand Response
What to Check Before You Buy
In Washington, Oregon, Colorado, and New York, the compliance burden sits with retailers and manufacturers, so a new electric storage water heater sold legally in the state will already have the port. Confirm it on the spec sheet anyway if you’re ordering from an out-of-state seller online, since those shipments don’t always track state-level appliance rules reliably.
Outside the mandate states, a CTA-2045 model is still worth considering if your local utility runs a demand response program. Many utilities offer bill credits or upfront enrollment payments that offset any price premium. Call your utility and ask what’s available before you shop.
Heat pump water heaters are the models most likely to ship with a CTA-2045 port as standard equipment, and they qualify for a federal tax credit of 30 percent of cost up to $2,000 per year under Section 25C.7Internal Revenue Service. Energy Efficient Home Improvement Credit Income-qualified households may also receive point-of-sale rebates of up to $1,750 under the Home Electrification and Appliances Rebate program, administered state by state.8ENERGY STAR. Home Electrification and Appliances Rebate Program
One more thing worth factoring into a 10-year purchase decision: new federal efficiency standards take effect May 6, 2029, and will effectively require heat pump technology for most electric storage water heaters with more than 35 gallons of effective storage volume. Smaller units can still use resistance heating.9Federal Register. Energy Conservation Standards for Consumer Water Heaters Buying a heat pump model now puts you on the right side of both the state CTA-2045 rules and the coming federal standard.