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First of all, that looks like a total hack job. Flying splices need to be contained in a J box, and what's with the 90 degree connector just dangling, is that the old water heater feed? It looks like they used the original hot wire but brought in a new neutral. If they just tapped into another circuit to get that neutral that is a problem. Also violates code in that all conductors of a circuit must be in the same cable or raceway. You have the 3 wires needed to make the water hot but how they did it is a joke.
Either the brown wire is a neutral gone bad or that was a switch loop with no neutral which explains why they brought a new neutral in. How many watts is the heater rated at on 120V and what gauge wire did they use?
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