Are you sure?
Look at what this energy page says about the Efficiency Factor:
If that's true, then it's independent of the VOLUME of the water heater.
So, if I read that correctly, a 40-gallon water heater with an EF of .58 takes roughly about 2 KWH of power to heat once while a 50-gallon water heater with the same EF would take EXACTLY the same amount of power to heat all 50 gallons.
Can someone check my math on that web page and report back if I understand incorrectly? If we turn off our brains, of course 40 gallons would cost less to heat than 50 gallons; but if we think, it might not be so.
Can you help me think about this properly? What does the Efficiency Factor say about costs for two different sized tanks with the same efficiency factor?
Donna