A. Traditional tank water heaters have a first hour rating which is determined by the amount of hot water the heater can produce in an hour when starting with a full tank of hot water. As tankless water heaters do not start with a tank of hot water, they don't really have a first hour rating the same way a tank water heater does. Instead, tankless water heaters have a gallons per hour rating, which is determined by how many gallons per hour the tankless water heater can produce when raising the incoming water temperature a specified amount.