Abstract: Disclosed is an improved water heater and method of heating water retained in a storage tank having a flue passing through it. The apparatus and method directs hot gases flowing upwardly along the flue toward the flue's wall when heat transfer between those gases and the water is desired. The apparatus and method also directs the air or gases flowing upwardly within the flue away from the flue's wall when heat transfer is undesirable. The apparatus includes a plurality of moveable flow control fins secured at various locations along the length of a baffle by supported iwthin the flue. Each fin is secured to the baffle by a piece bi-metallic material whose shape changes in response to its temperature. When hot gases flow through the flue during a water heating mode, the bi-metallic pieces position the fins near the middle of the flue along the baffle's length and direct the flow of hot gases outwardly toward the flue's wall.