Troubleshooting tank-style two-element electric water heaters is relatively simple once the operation is understood. When newly installed, or heavy usage outpaces storage, the tank is full of cold water. The upper element will be energized first and remain on until its thermostat is satisfied. When the upper thermostat is satisfied, it opens the circuit, providing power to the upper element, which closes the circuit to the lower element. At no time will both elements be energized simultaneously because that would cause the 30-amp breaker to trip off.
Under normal operating conditions with the tank completely heated (both thermostats satisfied), cold water passes through the dip tube and enters the base of the tank. As the cold water begins filling the tank from the bottom up, the lower thermostat engages power through its now-closed switch to the lower element. If cold water reaches the level of the upper thermostat, it closes its switch (which breaks power to the lower thermostat and element) and must be satisfied before its switch opens and provides power to the lower thermostat and its element.