larry moe 'n curly wrote:
I read that teflon tape should never be used on the threads of a water
heater anode rod because it electrically insulates the anode from the
tank and prevents it from protecting the tank. But I recently bought
a State brand heater containing two anode rods. One rod screws in the
normal way, but the other hangs from the hot water outlet by a 1"
piece of plastic, and it's definitely insulated from the tank. So
does this mean that the anode doesn't have to directly contact the
tank?

I have always used a single wrap of teflon tape around the bottom
threads of the sacrificial anode rod, figuring that the top threads
would provide the circuit continuity. I don't see how an electrically
isolated anode would offer any electrical (current flowing) cathodic
protection. Some chemical protection, maybe. Do the instructions give
you a clue as to the purpose of the insulated rod?