Originally Posted by rattleNsmoke
Like the pics Turbs sent, all three handles should point the same direction for summer operation.
The bypass must be closed to route all incoming water from the open cold through the water heater to the open hot water outlet.
Leaving the "middle" valve open (same orientation as the inlet and outlet valves) will add cold water to the hot water coming out of the heater resulting in uneven showers and warm (not hot) water.
Unless you mean all level with the ground?... Not all heaters have those kind of valves.