You are correct, the AHJ's suggestion would create a parallel neutral path and violate the NEC. Here's a breakdown of why and the relevant code sections

Why it's a violation:
Parallel Neutral Paths

The NEC explicitly prohibits using the grounding conductor as a normal current-carrying conductor. With the existing CSED having a bonded neutral, and being fed by the new CSED, you'd have neutral current flowing through both the neutral conductor and the grounding conductor back to the source. This is dangerous and creates a shock hazard.

Objectionable Current

This parallel path leads to objectionable current flowing through the grounding system. This can cause nuisance tripping, interference with sensitive electronic equipment, and, most importantly, increase the risk of electric shock.

Relevant NEC Sections



NEC 250.6 Objectionable Current

Addresses and prohibits objectionable current on grounding conductors.

NEC 250.24(A)(5) Grounding Service-Supplied Alternating-Current Systems

Generally only allows the neutral to be grounded at the service equipment. This section, combined with 250.6, makes a second grounding point (bonding) problematic.

NEC 310.8(A) Conductors in Parallel

This section primarily concerns conductors used for larger currents, but the principle applies. Neutral conductors are intended to carry neutral current, and shouldn't share that load with the grounding conductor.

Your Proposed Solution

Your proposed solution of installing insulated neutral bars in the existing CSED, isolating the neutral, and eliminating the bond is the

correct approach. Here's why:1. Removes the Parallel Path

Isolating the neutral in the existing CSED eliminates the neutral-to-ground bond, preventing neutral current from flowing through the grounding system.2.

Maintains a Safe Grounding System

The grounding conductors remain connected to the existing ground bars, ensuring a low-impedance fault current path back to the source for safety.3.

Complies with NEC

This setup adheres to the NEC by ensuring a single point of neutral grounding (at the new CSED) and preventing objectionable current.

Here's a more detailed breakdown of your correct solution



New CSED

This is your new service entrance equipment. It's where the neutral is bonded to the enclosure and the grounding electrode conductor connects.

ATS

The Automatic Transfer Switch simply switches between the utility source (from the new CSED) and the generator source. It does not create a neutral bond.

Existing CSED (now a subpanel)



Remove the Neutral-to-Enclosure Bond

This is the critical step. Disconnect the bonding jumper or screw that connects the neutral bar to the enclosure.

Install Insulated Neutral Bars

Install a new neutral bar kit that is insulated from the enclosure.

Terminate Existing Branch Circuit Neutrals

Move all the existing branch circuit neutral conductors to the new insulated neutral bars.

Leave Grounding Conductors on Original Ground Bars

All equipment grounding conductors remain connected to the original ground bars, which are bonded to the enclosure.

4-Wire Feeder

The feeder conductors between the new CSED and the existing CSED must consist of four wires: two hots, a neutral, and a ground. The ground cannot be used as a neutral.

What to Tell the AHJ

Politely explain to the AHJ why their proposed solution is not compliant with the NEC. Specifically mention the following: Parallel neutral paths Objectionable current The relevant NEC sections (250.6 and 250.24(A)(5)) That your proposed solution eliminates the parallel neutral path and maintains a safe grounding system.If the AHJ remains unconvinced, you can:

Ask for Clarification

Inquire about the specific NEC section they believe allows their proposed installation.

Consult with a Senior Inspector

Request a second opinion from a more experienced inspector within the AHJ's office.

Get a Formal Interpretation

If necessary, contact your local IAEI chapter (International Association of Electrical Inspectors) for a formal interpretation of the code.

Important Considerations



Generator Neutral

Ensure your generator is a separately derived system and that its neutral is bonded according to the manufacturer's instructions and the NEC, typically at the generator itself or within the ATS if the ATS is listed for that purpose. Your ATS instructions will clarify this.

Proper Bonding and Grounding: Verify that all bonding and grounding connections are made correctly and are tight.By following these guidelines and adhering to the NEC, you can ensure a safe and compliant electrical installation. Don't compromise on safety to appease an incorrect interpretation of the code. Flag for review