Three-Wire System
The three-wire system connects the neutral wire to the earth at the voltage source and the user location. It exists at zero volts and supplies an alternative return path for the current through the earth. The case of the appliance is also grounded to zero volts. A circuit breaker or fuse prevents thermal overload and exists in series on the active (live/hot) wire. Wire insulation colors vary by region. It is essential to check locally to determine which color codes are in use, even if they were followed in one particular installation.
Source
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"OpenStax College, College Physics. October 30, 2012."
http://cnx.org/content/m42416/latest/?collection=col11406/1.7
OpenStax CNX
CC BY 3.0.