1) Is this condition made worse if the phase conductors are not balanced, or even very much out of balance?

Yes, the neutral current can be even higher if the phase conductors are not balanced. When the phase currents are not balanced, the neutral current carries the imbalance, which can lead to higher neutral currents. In addition, harmonic currents from unbalanced loads can further increase the neutral current.2) What is the effect of this condition on the line side of the transformer...that is, are conductors, panels, and switchgear upstream of the transformer effected?

The high neutral currents on the load side can also affect the line side of the transformer. The transformer's neutral terminal is typically bonded to the secondary neutral, and the neutral current will flow through the transformer's windings and out the line side neutral. This can cause overheating of the transformer's neutral winding and the line side neutral conductors, panels, and switchgear.In addition, high neutral currents can lead to voltage distortion on the line side of the transformer. This can affect the operation of other equipment connected to the same line, such as motors and electronic devices. Therefore, it is important to consider the potential for high neutral currents when selecting and designing electrical systems with harmonic producing loads. Flag for review