Answer: I assume from reading your post that you haven't yet put in that new thermostat, unless you did it in the middle of the night "today". The problem you describe would be a cinch for someone with the right test equipment and understanding of "hot water heater electrics" to diagnose. All it takes is an amprobe (current meter) and a voltmeter (if that's not already combined with the amprobe. Without test equipment you're likely to frustrate yourself stumblig around "blind", which is what you'll be doing if you can't make voltage and current measurements to track down the culprit. The typical 220-240 volt hot water heater with two elements works this way: From a "cold" start, current flows through the closed upper thermostat contacts (and the overtemperature cutoff device) to energize the upper heater. Assuming nobody's pulling hot water from the heater: When the water in the upper part of the tank reaches the upper thermostat's set point temperature, that thermostat turns off the power to the upper heating element and enegizes the input of the lower thermostat, which will power the lower heating element until the water in the lower part of the tank reaches the setpoint temperature of the lower thermostat. Fom that point on, the lower thermostat will cycle on and off every once in a while to keep the whole tankfull at a contant temperature. When hot water is drawn from the heater: It is taken from the top of the tank, and cold water enters at the bottom of the tank, through a "dip tube" extending down to near the tank bottom from the "cold" inlet fitting at the top. The lower thermostat will close first, as the entering cold water cools it, and will enegize the lower heater. If hot water continues to be drawn off, the lower heater won't "keep up with it", and cooler water will reach the upper thermostat, causing it to switch over to powering the upper heater again. If water continues to be drawn it will take heat away faster than the upper heater can keep up with and you "run out of hot water." (End of narrative.) I think your best bet is to bite the bullet and have a new hot water heater installed, given the age of your unit. Otherwise, if you don't have a friend who knows these things and has the right test equipment, you are going to have to find a repairperson with enough smarts and the right test equipment to properly diganse and fix the problem without replacing more parts than are really needed. Sad to say, those aren't the attributes of every plumber you might call. A qualified person's laborcharges, plus the cost of the repair parts he supplies (at "full retail" of course.) makes buying a new heater not such a bad thing to do. That said, if you happen to be near Zip 01890, I'd come over and give you a hand gratis, just because...