Sounds like you have a leak. Check to see if there is a leak around
the upper element. Of course, it could be anywhere. However, the
fact that your water is not as hot would make me suspect the upper
heating element. I am surprised you have not seen water around the
base of the heater. Open the element panel and see if the insulation
is wet. How old is your water heater? It is not normal to have water
in your thermostat panel. I would deal with it promptly. You don't
want to find a flood from a leaking hot water heater no matter where
it is located.

Good Luck

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lvMMMCDLXXIX+1
"13jane" wrote in message
ups.com...
I have a AO. Smith electric heater. When I opened the thermostat
access panel there was about and inch to an inch & 1/2 of water in the
panel. This doesn't seem right to me. I have also noted that my hot
water isn't as hot as it used to be. Help! What action should I take
here. Thanks.