Thx. I ended up replacing whole unit since I got a deal on a it. Crazy that the tube was flaking vice cruming into bigger chunks. It also explains why my hot water was getting colder to soon.
On a side note I thought they solved this issue. My unit was barely 8 yrs old
Did you ever replace tube or unit. I have the identical material in all my hot water lines. Unit is only 8 years old. I thought the newer units were not suppose to the have the same dip tube issues then the ones manufactured in the 90s.