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You need to turn the knob on the gas valve (inside the heater) to the "pilot" position. Then, while holding a flame over the pilot assembly push down on the knob.
Gas should come out of the pilot and ignite. Continue holding the knob down for 10-15 seconds. Release the knob and the pilot should stay lit. If not the pilot generator may need to be replaced.
Turn the knob to the "on" position, close the heater and turn the heater on and turn the thermostat to hot. The heater should fire. If it does not fire and the pilot goes out, that may also indicate a pilot generator problem.
Most heaters has a pilot proving sensor of one type or another, it will be in direct contact with the pilot flame to prove that the pilot is lit and then will allow for the main gas to the burners to open. If the proving device has failed then it needs replaced.
Usual problems are:. Bad thermocouple, Bad vent, blowing pilot outl. Too small of pilot flame. Low gas pressure Leaking water heater, dripping on pilot. Bad gas valve. If your water heater is more than 8 years old and the gas valve is bad, I would replace the water heater. IF you decide to replace the pilot or the gas vavle, be sure to mount pilot exactly as is was designed. If you replace gas valve get an exact replacment or a "listed" replacement. If you'rd doing this and it's older, replace the temperature/relief vavle also. Water heaters can be very dangeroius if not properly repaired/maintained.
The pilot assembly should look similar to the pic above. Depending on where you live, you may be required to hire a certified plumber to replace the parts. If not you can do it your self. Keep in mind if it's not staying lit you also need to check the thermostat and the thermocoupler before replacing the pilot assembly. There is a good chance it is just the thermocoupler going out. It is one of the first things to check when troubleshooting a pilot light problem with a gas water heater. A thermocouple determines if the pilot light is lit. If it's not lit, the gas valve fails. If that's the problem, replace the thermocouple.
Shut off the gas valve on the water heater and the gas valve on the line near the heater. Remove outer and inner doors, and loosen the pilot and supply tubes and the thermocouple connections to remove the burner assembly.
Loosen the screw holding the thermocouple to the bracket. Remove old thermocouple. Bring it with you to the store to ensure you are buying the proper replacement.
Install the new thermocouple. Position the thermocouple so that the pilot flame heats 1/2 inch of the tip.
Reinstall burner assembly in the water heater. Tighten burner supply tube, pilot tube and thermocouple connections. Tighten thermocouple no more than a quarter turn more than hand-tight.
Turn on both gas valves. Check supply tube and pilot tube for leaks with soapy water. If soap bubbles, tighten connections to fix leak. Ignite the pilot light, and make sure the thermocouple tip is heating up. Replace inner and outer doors.
the pilot light is operated off a millivolt generator. that is the small tube directly in the pilot flame. its purpose is to generate a small dc current which is connected to the pilot valve inside the main valve. setting the control to pilot opens just the pilot gas supply. when operating normally the millivolt generator keeps a small electromagnet pulled in that keeps the pilot gas supply open. if it don't work the pilot gas supply valve closes. replace the thermocouple.