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Surprise! There is no violation here because the 4/0 aluminum Type SE feeder cable shown is installed outdoors. However, if the SE cable supplying the meters on the load side of the service disconnect (which, by definition, makes this cable a feeder) was also installed indoors, it would be a violation of 338.10(B)(4)(a), which covers the use of SE cable as feeders and branch circuits indoors.
In the 2005 NEC, the requirements of 338.10(B)(4)(a) stated, "In addition to the provisions of this article, Type SE service-entrance cable used for interior wiring shall comply with the installation requirements of Parts I and II of Article 334, excluding 334.80." Here the Code is essentially requiring Type SE cable to be treated as if it were Type NM cable when used indoors as feeders and branch circuits. However, the exclusion of 334.80, which deals with the ampacity of Type NM cable, means that the ampacity of the Type SE cable conductors would be determined in accordance with 310.15 and its accompanying tables.
In the 2008 Code, the 334.80 reference was eliminated. The wording of 338.10(B)(4)(a) now reads as follows, "In addition to the provisions of this article, Type SE service-entrance cable used for interior wiring shall comply with the installation requirements of Parts I and II of Article 334." The new wording now requires compliance with all rules in Art. 334, including the ampacity requirements of 334.80.
The part of 334.80 that presents potential problems for installers is the second sentence. It says, "The ampacity shall be in accordance with the 60°C (140°F) conductor temperature rating." This means for a given wire size the ampacity of the SE cable conductors must never be greater than the value shown in the left-hand 60°C column of Table 310.16. So, if the SE cable exiting the service disconnect were run into the building it would not be permitted to be the same size as service entrance conductors supplying the service disconnect.
For example, 4/0 aluminum (which has an ampacity of 180A at 75°C, as noted in Table 310.16) is properly protected by a 200A disconnect and would be permitted to supply this 200A service. However, at 60°C, 4/0 aluminum has an ampacity of only 150A. Therefore, if the feeder supplying the meter bank were run inside the building it would have to be of a size that is properly protected by a 200A circuit breaker. In this case, the smallest sized aluminum conductor that would be permitted is 300kcmil. If 4/0 copper conductor was used here it would comply with the requirements of the Code.
With all this being said, remember that for one- and two-family dwelling units, the rule of 310.15(B)(6) would permit running a 4/0 aluminum conductor into the building, because this rule applies to both the service entrance conductors supplying the service disconnect and the "feeder conductors that serve as the main power feeder."
Keep these subtle changes in mind whenever running SE cable as feeders indoors. If you are not covered by the rule of 310.15(B)(6), then the size of any such feeder would have to have an ampacity in the 60°C column that is properly protected by the service disconnecting means.