The third valve is so that when it is in the open position during winterization you can "bypass" the water heater. Otherwise you'd need 8 gallons of RV antifreeze to do the job. If the bypass valve is not present and you only close off the inlet and outlet to the water heater there could be water trapped in the supply and discharge lines which is prone to freezing. As a rule it's always a good idea to install a bypass around plumbing components like filters, tanks, heat exchangers and the like. In industrial situations it allows you to service the component without taking the entire plant down.
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2006 23B Hybrid with 10k round bar WDH
2011 F150 4x4 SCREW Ecoboost, Max Tow, Integrated TBC, 3.73 LS axle, Firestone Ride Rite airbags.
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