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Water Heater Relief Valve. What it does. why it leaks. and How to replace it.

The water heater relief valve leaks for four reasons, I will explain each reason in detail but first please read the following
The first reason a water heater relief valve leaks is.
The valve is old and it starts to leak, I have seen them start to leak within a years time, if your relief valve is a few years old and leaking, you should have it replaced regardless of why it is leaking.

Just a reminder replacing a water heater relief valve can be very dangerous, it may be best to have it replaced by a pro. The second reason a water heater relief valve leaks is, The water has gotten too hot, if the temperature of the water in the water heater reaches above 210 degrees F the relief valve will leak or even blow off, this is why the outlet of the relief valve must be piped to about 6 inches from the ground, you would not want to get a blast of 210 degree F water in the face.
The relief valve may leak before the temperature gets to 210 degrees F because of the extra expansion of the water as it heats.

This type of problem can be very dangerous, you can be scalded with water at a temperature of 140 degrees F. 210 degrees F is just below boiling water boils at 212 degrees F.

If your water heater is heating water to this level, this very hot water is coming out of the faucets in your home and you can be burned
If you have noticed water coming out of your faucets in spurts or like it is spitting, it's possible your water temperature is way too high.
it this case your water heater relief valve is doing what it is suppose to do, but should still be replaced after the problem that caused the water heater to get to hot is repaired.

What causes a water heater to get too hot? With an electric water heater a bad thermostat will cause the water heater to get too hot.
With a gas water heater a bad gas control valve will cause the water heater to get too hot.

Have it looked at by a local plumber call

The third reason a water heater relief valve leaks is water pressure, the relief valve is set to relieve pressure at 150 PSI (pounds per square inch) if the water pressure in your home rises to 150 PSI the relief valve is going to leak.

Some city or municipalities have high water pressure from their water plants so that the water gets to everyone on the grid.
To bring the water pressure down below the high pressure a PRV (pressure Reducing Valve) is installed in the home just after the main water valve, this valve can fail and allow more pressure into your home then the water heater relief valve can handle then you have a leak.
Also a defective pressure switch on your well pump could allow water pressure to get too high.
So whatever caused the water pressure to get too high after it is fixed, replace the relief valve.

And The fourth reason a water heater relief valve leaks is thermal expansion
When water heats it expands, and water can not be compressed, in most cases with a 50 gallon 50,000 BTU gas water heater with a house water pressure of 50 PSI, the water expansion will not be great enough to cause the relief valve to leak. 

With gas water heater with high recovery rates and a higher house water pressure the possibility of thermo expansion to 150 PSI increases, in this case an expansion tank needs to be installed, be sure it is an expansion tank designed for domestic water and not for a hot water boiler, there is a big difference and the boiler type will rust out within a year, and it is designed for low water pressure.

Note: Under no circumstances should you plug the end of a water heater relief valve, even temporarily, doing so can cause your home to be totally destroyed and can cause death to you and yours

Also see How to troubleshoot an electric water heater.
How to replace your hot water heater relief valve.