You've hit the key point of confusion many people have with the 125% rule for continuous loads! It's not just about protecting the wire from overheating (although that's a contributing factor). The primary reason is to prevent nuisance tripping of the Overcurrent Protective Device (OCPD) under normal, continuous operation.

Here's a breakdown of the reasoning: OCPD Behavior

Overcurrent Protective Devices, whether circuit breakers or fuses, are designed to trip based on two main factors:

Overload

A current that's higher than the rated capacity of the circuit but not necessarily a fault. This causes the OCPD to heat up.

Short Circuit/Ground Fault

A very high current caused by a direct path to ground or between conductors. This causes an instantaneous trip.The 125% rule primarily addresses the overload condition, specifically the thermal behavior of the OCPD under prolonged current flow.

Thermal Trip Curves

Circuit breakers, especially, have "thermal trip curves." These curves define the relationship between current and the time it takes for the breaker to trip. A breaker will eventually trip at currents slightly above its rating, but the higher the current, the faster it trips. Think of it like a pot of water on the stove. A little heat takes a while to boil, but a lot of heat boils it quickly.

The Problem with Continuous Loads and OCPDs

Continuous loads, by definition, operate for 3 hours or more at a time. Without the 125% rule, an OCPD protecting a circuit with a continuous load operating at its rated amperage would be constantly heating up. Even if the current is technically within the breaker's rating, prolonged operation at that level can cause the breaker's internal components to heat up and eventually trip. This is a nuisance trip because it's happening under normal, expected operating conditions.

The 125% Solution

By applying the 125% rule, we essentially derate the maximum load the circuit can carry. This ensures that the OCPD operates well below its rated amperage under continuous load conditions, minimizing heat buildup and preventing nuisance tripping. For example, a 20A breaker can only protect a maximum of 16A of continuous load (20A / 1.25 = 16A).

Why Not Just Overrate the Wire? While oversizing the wire does help with heat dissipation (as you noted), it doesn't address the fundamental thermal behavior of the OCPD. The breaker will still heat up if it's operating near its rated capacity for extended periods, even if the wire is cool. So, it's NOT just about the wire, and it's NOT just because the wire is oversized. It's about the combined effect of continuous load on the OCPD and the wire, and ensuring the OCPD doesn't trip under normal operating conditions.

In Summary: The 125% rule primarily addresses the thermal behavior of the OCPD, not just the wire. It prevents nuisance tripping of the OCPD due to prolonged operation at or near its rated amperage with continuous loads. Oversizing the wire helps with heat dissipation, but doesn't negate the need to also derate the continuous load for the OCPD.* The rule ensures that the circuit operates well below the OCPD's thermal trip curve under normal continuous load conditions.Think of it like this: You're running a marathon. You can't run at your absolute maximum sprint speed for the entire distance, or you'll burn out quickly. You need to pace yourself and run at a sustainable speed. The 125% rule is the electrical equivalent of pacing yourself for a continuous load. Flag for review