To limit your liability,the heater should be set to deliver 120 degree water. Doing this will probably mean that the 100 gallon heater is too small,but the alternative could be a lawsuit by a scalded tenant.: We are having problems with our water heater servicing an 11 unit apt. bldg. After having it serviced by several professionals – with limited results – we noticed that the thermostat was set very low (off the low end of the guage). What is the approx. temperature that the heater should be set for??