A method of operating a tankless water heater for heating a continuous supply of water. The method includes detecting a water flow condition within a heating chamber of the tankless water heater and regulating electrical current to first and second heating elements in response thereto. Both the first and second heating elements are located in the heating chamber, and respectively have first and second wattages, where second wattage is different than the first wattage. The regulating step further includes providing electrical current to the first heating element and not to the second heating element when a first flow condition is detected, and providing electrical current to the second heating element and not the first heating element when a second flow condition is detected, and providing electrical current to both of the heating elements when a third flow condition is detected.