Electric Hot Water Heater or Gas?

Hi,

We're doing a home reno that entails wiping out our chimney, and need to replace the existing hot water tank with either an electric hot water heater or a high efficiency gas model. (We have to vent out the side of the house, once the chimney is gone.)

The high efficiency gas heater runs close to CDN $2000, while a 40 gallon electric model runs around CDN $675 -- big difference in price. But we've heard conflicting things about the recovery rate of the electric heaters vs. natural gas. And the company that we're considering going wiith is quite adamant that the electrric heater would not serve our needs.

There are three of us living in the upstaitrs (two adults + baby), and because of our child, we do a fair amount of laundry. But we also have two tenants living in a basement suite. The suite has its own laundry, as well.

So...four adults + one child, plus two laundries that can be going at the same time. Add to this the occasional guest.

Which hot water heater would you choose?

Thanks very much in advance for your replies.