with a 1 Degree variation it is likely the ranco will shut down the HS frequently. I would run a (with no snakes...) test to find the upper safe temp inside the tub use the ranco as this set point. For example my rack temps...

The herpstat is set for 94º this gives my 89-91º inside the tubs. The back up T-stat is set for 100º this temp delivers 95-97º tolerable range until the problem can be corrected.

The new herpstat one has a power down mode if the set point is low (under alarms I believe) and with the mechanical relay (typically will fail off not on) it is debatable if a failsafe is needed at all. I use one on my HS4 however in this case of this unit I have the failsafe set even higher to shut down when the temps hit 100ºF interior the HS is set for 5º shut down. so the two together make a seriously safe combination (triple redundant)

Hope this helps

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Oh it depends a lot on probe placement... I assumed the probe was located on the flexwatt in both primary and failsafe. If you have an interior mounting for the primary the secondary should go on the heat source directly and be set at a point I would say 10º over the highest operational temp.

I also always place the failsafe on the top rack slot as it is typically the hottest.

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Yes you need ventilation holes. VPI suggests that if you are unsure you should have more. High humidity and low ventilation is linked to RI and other nasty issues. The 'petri dish' syndrome...