I'm an electrical engineer whose job requires me to design and submit 240/277VAC power control products to Underwriters Laboratories for safety approval. To do my job I have to maintain constant vigilance on where the current goes when stuff gets hooked up wrong or wires accidentally break after the installer leaves the job site.
I recently repaired a UL-listed under-counter tankless water heater at my church. I noticed that the heating element (a coiled nichrome wire) is immersed in the cold water stream without the benefit of any insulating sheathing around the wire.
How do heaters of this architecture manage to get safety certification? The guys at safety certification agencies are usually junkyard dogs about current flowing into the green safety ground wire. They generally disallow intentional ground current, saying the green safety wire is intended for rare fault events involving component failure or mis-wiring.
If a tankless water heater is powered from a branch circuit that is neutral referenced (for example, 120VAC) there must be significant amount of current flowing constantly from the exposed nichrome wire, through the warmed water, and into the grounded inlet/outlet brass fittings. Loss of green safety ground at a tankless heater would make the nearby faucet electrically live if plastic plumbing pipe is used upstream from the heater.
Would appreciate any feedback from other posters on this.