They want to see a disconnect around here and that is usually where the electrician stops, although he still "owns" the wire going to the water heater if there is a violation. I see them run in everything from just Romex to FMC, MC or SealTite. I haven't seen metal water pipe in so long I tend to forget about bonding
Re: Water Heater Connections#90939 12/18/0411:45 AM12/18/0411:45 AM
If I was the AHJ on an inspection for a water heater, I would accept a breaker padlock device manufactured by the same company that made the breaker/panelboard.
Many mobile/manufactured homes have an electric water heater & every one that i have looked at has a padlock attachment on the breaker. This makes HUD happy & so a similar installation in a dwelling should satisfy any AHJ you deal with, but it is always best to ask if you aren't sure.
You could use one of those $8 pull out air conditioner disconnects just to CYA, but IMO, you'd be wasting $8 & some time.
Few things are harder to put up with than the annoyance of a good example.