One example embodiment relates to a water heater controller. The water heater controller includes an operating conditions circuit structured to receive temperature measurement signals indicative of temperatures over time of water in a tank of a water heater, and occupancy measurement signals indicative of whether individuals are present in an area proximate the water heater. A drift threshold circuit is structured to, in response to the occupancy measurement signals indicating that an individual is present or not present, define a plurality of drift threshold levels to trigger operation of a heating element of the water heater. A control circuit is structured to controllably operate the heating element based on the occupancy measurement signals and on the plurality of drift threshold levels.