You've done a good job laying out your reasoning and showing your work. Let's break down the scenario and address your concerns.

Analysis of Your Calculations and Approach Conductor Sizing

You're correct to use 430.122(A) and the 125% factor. Your calculation of 118.8A is accurate. Your selection of #1 THHN (rated 130A at 75°C) meets the minimum ampacity requirement.

OCPD Sizing

You've correctly followed 430.130(A)(1), 430.6(A), 430.250, and 430.52(C)(1) to arrive at a maximum breaker size of 240A, then rounded up to 250A. You've also confirmed this is within the VFD manufacturer's specified maximum.

The Key Question: Conductor Protection vs. Motor/VFD Protection

Your concern is valid: a 250A breaker does not provide overcurrent protection for a #1 THHN conductor (rated 130A). This is where understanding the purpose of each protective device becomes crucial. VFD Input OCPD (Your 250A Breaker)

This breaker is primarily designed to protect the VFD from catastrophic fault currents (short circuits). It is not intended to protect the conductors from overload. 430.130 makes it clear that the motor Full Load Amps is the driving force for the OCPD calculation.

VFD Overload Protection (Internal)

The VFD itself is equipped with electronic overload protection. This internal overload protection monitors the motor current and trips the VFD if the motor draws excessive current for an extended period. This is what protects the motor and, indirectly, helps protect the conductors. The VFD is programmed to protect the motor, and since the motor is attached to the output of the VFD, it will trip if there's an overload situation.

Conductor Overload Protection

The VFD's internal overload protection, in conjunction with the chosen conductor ampacity, is intended to protect the conductors from overload. The conductors need to be sized to safely carry the expected load (125% of the VFD input current) and to withstand short-duration overloads that the VFD will handle before tripping.

Answer to Your Questions and Recommendations1. "Should I decrease the breaker rating as its a code maximum...?" No, do not arbitrarily decrease the breaker rating. The 250A breaker is the maximum allowed, based on the motor FLA, and that value is also corroborated by the VFD documentation. Going smaller than this value could cause nuisance tripping.2. "...and/or increase the conductor as its a code minimum?" This is the more appropriate action. Increasing the conductor size to #1/0 THHN (150A) would mean that the 250A breaker is closer to protecting the conductor from overcurrent, but it would still rely on the VFD for overload protection.3. "Or is it acceptable to leave as is- since the VFD has internal overload protection?" Potentially, but it's borderline. While the code technically allows the setup with #1 and a 250A breaker if the VFD's internal overload protection is properly configured and functioning, it's not the best engineering practice. It relies heavily on the proper function of the VFD's overload protection to protect the conductor.

Recommended Action: Increase Conductor Size

The best and safest approach is to increase the conductor size to #1/0 THHN (150A). This provides a greater margin of safety for the conductors and provides some level of overcurrent protection.

Why is this the preferred approach? Increased Safety Margin

A larger conductor can handle short-term overloads more effectively, reducing the risk of insulation damage and potential fire hazard.

Future-Proofing

If, in the future, the VFD is replaced with a model having a higher input current, the larger conductor will be more likely to be adequate.

Best Practice

It's generally considered good engineering practice to provide some level of overcurrent protection for conductors, even when other protective devices are present.

Important Considerations VFD Manufacturer's Instructions

Always consult the VFD manufacturer's documentation. They may have specific recommendations for conductor and OCPD sizing that supersede general code requirements. Ensure all settings in the VFD are configured to protect the motor and conductors.

Local Codes and Amendments

Be aware of any local electrical codes or amendments that may be more stringent than the NEC.

Voltage Drop

Check voltage drop calculations to ensure that the voltage at the VFD input remains within acceptable limits under full load. Longer runs may require larger conductors to minimize voltage drop.

Grounding

Ensure proper grounding of the VFD and motor according to the NEC and manufacturer's instructions.

Short Circuit Current Rating (SCCR)

Confirm that the SCCR of the VFD is adequate for the available fault current at the point of installation. If not, supplemental overcurrent protection (e.g., fuses) may be required.

In summary, while your original configuration might technically* meet code requirements, increasing the conductor size to #1/0 THHN (150A) is a more robust and safer design. Flag for review