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SirJaxx wrote:

The reason for the 80% allowance is to prevent insulation damage to the conductor, not the breaker.

This is explicitly not correct, and the reason why I asked the question in the first place.

The calculations and deratings in Article 310 provide for the ampacity of conductors which will prevent undue degradation to the insulation. These calculations consider the temperature rating of the insulation, the ambient air flow, the thermal conductivity of the surroundings, the presence of other current carrying conductors, the ambient temperature, etc. The ampacity described for a given conductor in article 310 is the ampacity that can be carried 100% of the time without excessive insulation degradation.

When a normal circuit breaker is used, it must be rated 125% of the continuous load. In order for the conductors to be properly protected by this circuit breaker, they too must be 125% of the continuous load. However if a "100% rated" circuit breaker is used in an appropriate assembly, then it may be sized for 100% of the continuous load, and the conductors as well may be sized (using Article 310) to be at 100% for the continuous load.

Now, it is clear that operating conductors at only 80% of their continuous load is 'better' from the point of view of heat generation and insulation degradation, but operating them at 100% of their continuous load (as determined by 310) is clearly allowed if the proper circuit breaker is used.

See, for example the Exceptions in 215.2(a)(1) and 215.3

-Jon