How you should treat the neutral conductor depends on your system design.
Neutral conductors must be grounded to prevent inadvertent potentials on conductive surfaces of equipment, enclosures and cable conduits and raceways. Alternate sources can make this process confusing, but referring to the NEC can help clear the problem up. Sec. 230.95 requires ground fault protection for solidly grounded wye electrical services of more than 150V-to-ground, but not exceeding 600V phase-to-phase for service disconnects rated 1,000A or more. 
Why did this requirement come about? The most popular power system in commercial, industrial, and institutional facilities is 480/277V, 3-phase, 4-wire, wye-connected. Equipment design advances in the late ’60s resulted in a rise in popularity of 277V lighting systems. As more facilities installed these systems, the occurrence of electrical fires increased. Investigation showed that 277V systems increased the likelihood of arc faults to ground. Since arc faults have impedance, the phase overcurrent protection often would not detect these faults until significant damage had occurred. The NFPA responded by revising the NEC to include protection against arc ground faults.
Since the expected current in an arc fault is considerably less than that of a line-to-line or line-to-neutral fault, phase overcurrent protection devices were taking too much time to recognize and interrupt the faults. In response, several manufacturers began producing ground fault arc current detection schemes that depended on the presence of a known return path for the arcing current to the power system neutral point. These schemes made it important to pay close attention to neutral conductor grounding.
Grounding a power source neutral will increase the cost of distribution equipment. When the load transfers from one source to another in a system that uses two or more separately grounded power sources to feed a load, you may need to switch the neutral conductor and the phase conductors. This raises the price of transfer switches, so don’t switch the neutral unless you have to. You also need to design neutral conductor switching so your switching contact doesn’t interrupt current. Avoiding current interruption on this contact maintains low resistance in the neutral path.
The voltage drop across the conductive path will limit current in an arc ground fault. The voltage across the arc is relatively constant and can be expressed in the formula, (Esource–Earc )/Zpath, where E1 is the source current, E2 is the arc current, and Z is the path(?). You can detect this arcing current by measuring current in the bonding jumper that connects the neutral conductor to the system ground, or by adding the 3-phase and neutral currents at any point along the conductor path. In single- and 3-phase currents, the sum of the instantaneous currents at any point in the path should be zero. If it isn’t, an objectionable current is flowing outside the design path. In reality, distributed capacitance between parallel conductors and ground, such as the phase conductors and the wall of a raceway through which the conductors travel, will always create some current flow in the ground return path. However, excessive current can cause considerable damage, so you need a means to detect ground current and differentiate between acceptable and objectionable currents.
Code issues. Sec. 250.20(B) establishes when the power system shall be grounded, while 250.20(D) requires the grounding of separately derived systems. However, according to FPN No. 1, when the neutral conductor of an alternate power source is solidly connected to the service supplied system, that alternate power source is not considered a separately derived system. But what does this mean?
If separately derived sources meeting the requirements of 250.20(B) include an alternate power source whose neutral conductor is solidly connected to that of the preferred source, the alternate source neutral is considered grounded through the ground at the preferred source service disconnect. In other words, sometimes the neutral of a generator power source will be grounded at the generator neutral and other times it won’t. Let’s look at what you must consider before deciding when the neutral should be grounded.
When not to ground the generator neutral. Among the reasons not to separately ground a generator neutral is the fact that the NEC doesn’t require ground fault sensing. Generally, solid connection of the generator neutral to the preferred service neutral will preclude separately grounding the generator neutral. It’s possible to ground the generator source neutrals of power systems that don’t fall under 250.20(B) by connecting them to the preferred source service neutral. Therefore, for 480/277V, 3-phase, 4-wire, wye-connected power systems rated less than 1,000A (833kVA), you can connect the generator neutral conductor directly to the preferred service neutral. You can also connect the generator neutral conductor directly to the preferred service neutral for all 208/120V, 3-phase, 4-wire, wye-connected power systems.
As power shortages and telecommuting are on the rise, so is the number of residences with standby generators. The ground prong of these receptacles is connected to the generator frame, which is connected to the generator winding neutral point. Consequently, any fault or inadvertent current path between the frame and a phase conductor will cause the receptacle to disconnect. When the premises wiring is connected to the generator, the neutral becomes effectively grounded when the neutral conductors are connected together.
If the service is 480/277V, 3-phase, 4-wire, wye-connected and the generator is permanently installed, you can eliminate the need for neutral switching. If you limit such a service to less than 833kVA, you can solidly connect the generator neutral to the service neutral—the bonding jumper between the main service switchboard neutral and ground bus grounds the service neutral.
Ground and switch the neutral. When the service falls under 230.95, you should ground the neutral at each source and switch it where the Code requires ground fault detection coordination. When the service rating equals or exceeds 1,000A (833kVA), 230.95 requires ground fault protection on the service disconnect. What if your load is important enough to justify an alternate power source and transfer switch (Photo)? In that case you may want to expand the ground fault protection scheme to second level branch circuit protection, according to 230.95(C), FPN No.2.
When the NEC requires ground fault protection and you have an alternate power supply, you must switch the neutral. If you have a service larger than 1,000A, the NEC requires ground fault protection at the main service disconnect. If the generator neutral grounding runs via a solid connection to the main service neutral and the generator experiences a ground fault while feeding the load, the main service disconnect will open. This will not disconnect the arc fault from the generator, and coordination will be lost.
If the neutrals of the two sources are separately grounded, you must switch the load neutral conductor to the source feeding the load, per 230.95(C) FPN No. 3. Ground fault current will return only to the source from which it originates, providing for coordination of the ground fault protection scheme.
It’s not always necessary to separately ground the generator neutral conductor, but if you do, you may need to switch a load neutral along with its phase conductors when transferring loads between power sources, particularly when you use ground fault protection. The NEC requires ground fault protection for 480/277V, 3-phase, 4-wire, wye-connected services rated 1,000A or more, but it’s optional in other configurations that don’t include ground fault protection. However, where a branch circuit neutral conductor transfers between sources, the switching means should assure the neutral conductor switching contact doesn’t interrupt current.
Daley is division engineer in the switch division, ASCO, Florham Park, N.J.