My question arose from my previous questions. Here depicts how electricity is distributed to houses:http://www.epanorama.net/documents/groundloop/feed_1phase.gif It seems like the earth ground and neutral are connected at the end. If so why we not just ground the chassis to neutral instead of earth?
Firstly, note that in some parts of the world, neutral and ground are NOT connected at the house, but back at the substation (transformer) so there may be a few volts on neutral in those systems.
But to the question : Consider if you did just connect chassis to neutral.
Then what happens if part of the house wiring fails open circuit?
1) Live (Hot) fails ... appliance stops working safely.
2) Neutral fails ... appliance stops working - with the chassis live!
This is not good.
Connect the chassis to earth and what happens when a wire fails?
1) Live (Hot) ... appliance stops working safely.
2) Neutral ... appliance stops working safely. If a current path develops between live and earth (perhaps you are trying to fix it) 10 or 20ma will trip a modern breaker disconnecting the supply.
3) Earth ... Nothing happens unless something else goes wrong. The earth failure will be caught at your next scheduled safety test. Right?
The PE (protective earth) wire does not carry any current so that the chassis of any electrical device is always zero and it is always safe to touch it. If you connect the chassis to neutral wire (N) there may be voltage present due to voltage drops in the wires and touching the case may be lethal. It is also easy to detect any faults as you only need to detect a small current present. Typical protective devices will trigger if the current in PE wire is higher than 20mA.
There are two issues with combining neutral and earth.
The first as others have answered is that if the neutral connection fails open-circuit the combined neutral and earth becomes live.
The second is that you lose control of where you neutral currents flow. Consider a computer and a printer plugged into differnet circuits. Supose that the computer and printer both have their signal grounds connected to mains earth. The computer and perhiperal are connected via a data cable that links their signal grounds together.
In a seperate neutral and earth setup the neutral current from computer and printer is forced to flow down the neutral conductors in the corresponding circuits.
In a combined neutral and earth setup if the computer and printer draw different ammounts of power or the circuits they are plugged into have different resistances then a substantial current can flow down the ground of the signal cable. This can cause overheating of the signal cable.
Combined neutral and earth setups are used in some situations. In some parts of the world they are used for electricity distribution wiring and pretty much every electrified railway uses them but when they are used extra precautions need to be taken to mitigate the hazards.