An update for those interested.

I replaced the water sensor/thermostat and problem was still happening. Another call to the Gas company sent out a chap who debugged my problem. Since this was a Mv heater he said it got its current from the flame of the pilot light. With an ohmmeter we measured the resistance of the flow valve controller which was rougly 550. He thought that was a little low and took a look at the burner. After giving it a quick clean using some sort of air device the resistance was measured again and read ~750. The heater is now performing with no problems (touch wood).

Please ignore my electrical ignorance, I focused on Comp Sci. at college.