| Since the neutral wire and the Ground wire are both connected together at | the Service entrance, why are they both needed? Instead of connecting the | ground wire to the case of appliances, connect the neutral wire to the case | and throw the ground wire away. I have never been able to get an answer on | this. I've Googled this to death. Can anybody out there clear this up?
The neutral wire carries current. There will thus be some voltage present at locations away from the ground bonding. The further away, the higher the voltage. The higher the current, the higher the voltage. The smaller the wire, the higher the voltage.
The EGC (Equipment Grounding Conductor) is different. It does not carry current (except during times of a fault connecting to it). Therefore it will not have the voltage on it that a neutral could have at times under normal usage.
The 240 volt circuits (known as "two-twenty") are different. Both of the electrical conductors are always "hot" or "live". Neither is a neutral. In these cases there is no choice; an EGC needs to be there to provide a ground reference. You could have a neutral wire not carrying any current, but that would effectively be the same thing if it goes to the service entrance panel (not so if it goes to a subpanel). The typical appliances using this type of circuit are heavy duty air conditioners, central electrical heating, and electric water heaters.
The dual voltage 120/240 circuit is the most complex in a home. It has
3 current carrying conductors. It is the 240 volt circuit with a neutral added. It also poses a greater risk since that neutral could become disconnected and cause the voltage on the frame of the appliance to be elevated to a rather high level. This danger is real because a broken neutral connection would not normally be detected as a fault and so the appliance would still have power and probably operate (maybe operate just fine or maybe operate erratically). Add the EGC and connect it to the frame instead of the neutral, and now you have the safety. The typical appliances using this type of circuit are kitchen ranges and laundry room clothes dryers. These do so because some components of these appliances (lights, clocks, and motors compatible with low power gas versions) are designed for 120 volts rather than 240 volts.
The very rare instance of three phase power in a home in the USA is not any different with respect to the EGC. The numbers may work out a little different, but essentially it is the same, except that you may see as many as 5 wires in some places (3 hots, neutral, and EGC) whereas you would only see as many as 4 wires with single phase.
Note that the NEC requires subpanels to _not_ bond the neutral to EGC. One of the reasons for this is that the neutral conductor at the subpanel can have a voltage due to current flowing on the feeder neutral that will be present on every branch circuit of the subpanel. Additionally, this voltage could be substantial if there is a neutral connection problem, while such a condition would typically not cause breakers to trip nor be seen as an electrical outage that needs to be fixed. Connecting the EGC and neutral together at the subpanel, along with proper grounding via a grounding electrode, could lessen the issue, but it will create other more complex issues (such as cross feeding significant current over other kinds of wiring like telephone or cable TV).
Many homes still don't have any EGC wiring, or have it only in limited cases, and yet have not burned down or electrocuted anyone. That does not mean a lack of EGC is perfectly safe. These things are a matter of degree. The NFPA (National Fire Protection Association) Electrical Code Making Panel (CMP) has studied the issue for years based on input from fire departments, emergency rescuers, and medical personnel, for decades and has concluded that the numbers warrant having this extra protection in all new and rebuilt installations. We have a very safe electrical system these days (particularly compared to what was 100 years ago). Still, older wiring is substantially riskier in comparison, for many reasons, with the lack of EGC as one of them. An extremely small risk percentage multiplied by this risk increase is still very small. But I'd rather go for the smaller of these.
GFCI (Ground Fault Circuit Interruption) protection can cover many of the cases that EGC also protects from, and it can also function and even be tested without an EGC present. It's not a complete solution. But it is better than not having GFCI, especially when EGC is absent. GFCI can be added to older wiring more easily since it does not involve tearing out walls to rewire.
The EGC needs to run along with the associated current carrying conductors, either as part of a cable assembly together, or inside the same conduit. This ensures that should there ever be a high current fault, the current will not induce voltage in other wiring, nor acquire inductance that could result in a delay or failure of the overcurrent protection from opening the faulty circuit fast enough. Adding an "extra separate ground wire" is not the correct way, even if it is parallel but outside of existing cables. Only a complete rewire brings an older system up to today's standards of safety.