I am assuming that A/C = Air Conditioning. And when you say the heater does not work when the A/C is on, you are talking about the hot water heater.
With the A/C turned off what does the water heater do? There should be no correlation between the A/C and the water heater except the 110 volts and I would tend to think that you would be experiencing other problems with the 110 volt appliance's if this was a 110 volt problem.
Tell us what you find and good luck.