Water falling down a vertical drain stack does not run down the middle of the stack, but instead clings to the inside wall of the pipe. In a DWHR application, falling drain water forms a thin film that rapidly imparts its heat to the colder pipe wall. The Power-Pipe® captures much of this heat, then "recycles" it to raise the temperature of incoming cold water.

Because the incoming cold water is preheated before going into the water heater and plumbing fixtures, the water heater uses less energy to raise the temperature of the water to the desired level for use, which saves money and increases the effective water heater capacity.