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Cat IV Water Tank Vent?

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This is an American PowerFlex water heater. I was looking at the installation instructions and it did not show this type of vent. I have not seen this before.

What is its purpose?

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Is the water heater directly in front of the furnace?

Thanks all,

Yes. About 8" away.

The same tank and set up was used in other units where the water tank was in a separate closet with a washer/dryer.

I don't know what the funk in the pan is. The water was off to that WH.

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