JBD writes:
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All of the documentation I have found lead me to believe the 80% rating is an application restriction caused by the NEC requirement for sizing conductors at 125% of the circuit current.
I have reasons for believing that the reverse is true; that the 125% oversizing of the circuit conductors is based upon the rating requirements of the circuit breakers rather than the circuit breaker requirements being set by the conductors.

1) Why have a whole Article dedicated to determining the ampacity of conductors, and then arbitrarily require in other Articles that this ampacity be derated by 20%? Why not simply alter the ampacity tables to incorporate this derating? Or use different insulation degradation characteristics which reduce the allowed operating temperature...if THHN wire were restricted to a maximum operating temperature of 80C rather than 90C, it would have lower ampacity but would last longer.

2) There exist breakers that are listed for continuous operation at 100% of their trip rating. In some articles (for example 210 Branch Circuits 210.19(A)(1) and 210.20(A) ) there are specific exemptions to the 125% rating requirement. If one is using a normal 80% rated circuit breaker, then the circuit breaker and the wire must _both_ be rated to 125% of the continuous load, but if one uses a less common 100% rated circuit breaker, then the circuit breaker _and_ the wire can simply be determined for the continuous load. Clearly if the code wanted to require that wires _always_ be rated 125% of the continuous load placed on them, 210.19(A)(1) Exception would not exist.

3) There clearly are situations in which the code wants the conductors to be oversized; in situations described by these articles, the exception for 100% rated breakers is not found.

4) The McGraw-Hill Handbook for the NEC, in discussing these exceptions, explicitly says that this is for protection of the breaker, not the wire...but I wouldn't trust this information as a sole source.

JBD writes:
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Can you provide any documentation to support your statement "...I have seen enough references that suggest that an 80% rated breaker _will_ be damaged..."?

I have seen a couple of usnet news references; but these are poor enough to be not really be considered supporting documentation. The only serious documentation is the McGraw-Hill Handbook mentioned above, where they explicitly state that normal 80% rated circuit breakers will be damaged if operated at > 80% loading for extended periods. The example that they give is specifically in the context of industrial installations, but the same rules seem to apply to smaller residential circuits and breakers. I can provide a page number reference later in the week.

As I've said above, my engineering gut tells me that a normal 80% breaker, when loaded to >80% (but less than 100%) for an extended period of time will heat up, and might trip at lower than rated trip current because of the higher temperature...but without any damage. I am trying to confirm that this is the case, and that the tale of circuit breaker damage described in the McGraw-Hill handbook is false.

The NEMA quotes that you provide state that the conductors are protected, and that the breakers are calibrated to trip with a particular time/temperature/curve. But I don't think that they say what will happen to the _circuit breaker_ when it heats up inside of an enclosure.

Regards,
Jonathan Edelson