I'm afraid I don't know what's going on there, if that switch is for alarm purposes only, I cant see how it affects the heating elements microswitches operation.
If you rotate the photo 90deg anticlockwise, you can see above and to the right the neon switch, the two heating element microswitches, (one behind the other), the switches are operated by the hollow rectangular plastic pieces which have spring loaded pushrods attached which are pushed upwards by the diaphragm when the shower is switched on, the power selector has a shaft with two cams that sit inside the hollow rectangular bits with the cover in place, when a fully cold shower is required the two cams are positioned to push down the (spring loaded) pushrods a few mm so when the diaphragm is pushed up by the water pressure, neither of the microswitches can operate, if Eco (one element) operation is requested then one of the cams is no longer in contact with its rectangular piece and one microswitch will make and switch on one element. If both elements (full power) is required the the power control is further turned to its full power position and the other cam will now also not be in contact with its rectangular piece so full power operation is restored.
I cant figure out how the neon microswitch is operated, it may be by that inverted L shaped plastic bit that is also moved up by the diaphragm, but one way or the other I just don't understand how this interferes in any way with the power microswitches.
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