I don't intend to sound snotty here, but I suspect that it will come off that way, so apologies in advance:

It sure sounds to me like you've already convinced yourself to rip up the old 3 wire system and install a 4 wire system, and just want to be talked into spending the money [Linked Image]

The reason that single phase sub-panels are normally wired using 4 wires (2 hots, neutral (or ground_ed_) , ground (or ground_ing_) ) is that if you were to connect the neutral and the ground at more than one location, a certain fraction of the neutral current would flow through the grounding system, eg. through your raceways and conduit connectors, etc. Inside a structure, this can pose a significant hazard. Even outside a structure it can pose a hazard, but it is generally not considered as much of a problem. In power distribution systems, the neutral is _regularly_ bonded to ground in multiple locations, in other words following the exact opposite rule (in your house you bond neutral to ground _once_ and only _once_, but the POCO bonds neutral to ground many, many times).

In the situation that you face, you are halfway between service in your own house and power distribution. You have two separate 'structures', or perhaps a structure and a pole (I'll let the higher ups make that call). You _don't_ have any other metallic pathways between these two 'structures', so the three wire system is possibly allowed, and would be very much like the three wire service that the POCO normally provides.

Given the choice, I personally would prefer the three wire system. My reasoning is that I would prefer to have the electrical system tied to ground in my house, rather than tied to ground at a point more than a hundred feet from my house. The longer the run to the bond between the neutral and the ground, the greater the impedance, and the greater the possible voltage difference between the electrical system and the building ground. In terms of safety issues, I believe that you are at the point of '6 of one, half a dozen of the other'; by not having the alternate metallic pathway between the two 'structures', you have eliminated the major safety issue of tying ground to neutral and multiple points, so now you have to balance the remaining safety issues of having neutral and ground tied in two locations versus the safety issues of having a much longer run to your neutral to ground bond.

I suppose that you could eliminate the 'where to ground' issue entirely by using a transformer. You would re-derive the neutral in your house, and bond it to your grounding system there. Seems like a pointless exercise to me, but I believe that it would be legal....

-Jon
I personally would prefer the thr