In my area of Minnesota, we are HUGE Natural Gas users, so I very rarely ever see an Electric Water Heater, and when I do, they are rarely messed up in the wiring department.
Yesterdays inspection had this 2014 installed WH. I don’t recall ever seeing one being wired with this type cable before. They are always hardwired in armored cable and to a box on the wall adjacent to the WH.
Q: Is this type cable an approved material for this application? It does not go to any box, but directly (about 15-18 feet) to the panel in another room of the basement.
Hard to tell from the photo but it could be UF cable which would be acceptable if properly supported and not subject to physical damage. It almost looks like a flat appliance cord but given the length it probably isn’t.
A water heater requires a disconnecting means which can be a circuit breaker if it’s within sight and 50’ or less away. Since it’s in another room then it would likely require a breaker locking device at the panel.
We get a lot of electric water heaters here and most are installed in garages. Usually, it is NM covered by flexible conduit. If the water heater is in a crawlspace, unfinished basement, or mechanical room in a basement, there is little expectation of physical damage as occupants rarely go there anyways. Rats don’t count though.
Anyway, as others have indicated, the wiring looks like UF. UF is rated for direct burial and has thicker insulation than NM, so in a way it inherently has some physical protection built-in for the wiring when you are using it above ground.
Might need a breaker lockout if this water heater is not within sight of the panel.
Code Change Summary: Requirements have changed for the disconnection of permanently connected appliances.
Section 422.30 requires a means to simultaneously disconnect each appliance from all ungrounded conductors in accordance with Part III of Article 422. There are several different types of acceptable disconnecting means permitted in Part III (depending on the appliance) which may include a unit switch with a marked “off” position, a horsepower rated snap switch, or even the branch circuit breaker.
In the 2017 NEC, the rule is crystal clear; “The branch-circuit overcurrent device shall be permitted to serve as the disconnecting means where the switch or circuit breaker is within sight from the appliance or is lockable in accordance with 110.25”. “Within sight from the appliance” does not only mean that while flipping the switch, the electrician can see the appliance. It also means that while servicing the appliance, the switch can be seen by the electrician and it is within 50 feet.
This new language aligns with similar requirements in 422.31(B) for permanently connected non-motor appliances rated over 300 VA such as an electric water heater. If there is no disconnecting means within sight, then the circuit breaker must be lockable.
It’s UF, hard to see, but says right on it. The inspector failed to note the markings 
