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Part a shows an ac voltage source connected to resistor R and part b shows schematic for three-wire system.
(a) Schematic of a simple ac circuit with a voltage source and a single appliance represented by the resistance R . There are no safety features in this circuit. (b) The three-wire system connects the neutral wire to ground at the voltage source and user location, forcing it to be at zero volts and supplying an alternative return path for the current through ground. Also grounded to zero volts is the case of the appliance. A circuit breaker or fuse protects against thermal overload and is in series on the active (live/hot) wire.

There are three connections to ground shown in [link] (b). Recall that a ground connection is a low-resistance path directly to ground. The two ground connections on the neutral wire force it to be at zero volts relative to ground, giving the wire its name. This wire is therefore safe to touch even if its insulation, usually white, is missing. The neutral wire is the return path for the current to follow to complete the circuit. Furthermore, the two ground connections supply an alternative path through ground (a good conductor) to complete the circuit. The ground connection closest to the power source could be at the generating plant, whereas the other is at the user’s location. The third ground is to the case of the appliance, through the green ground wire, forcing the case, too, to be at zero volts. The live or hot wire (hereafter referred to as “live/hot”) supplies voltage and current to operate the appliance. [link] shows a more pictorial version of how the three-wire system is connected through a three-prong plug to an appliance.

The figure shows schematic for three-wire system with three-prong plug.
The standard three-prong plug can only be inserted in one way, to ensure proper function of the three-wire system.

Insulating plastic is color-coded to identify live/hot, neutral, and ground wires, but these codes vary around the world. It is essential to determine the color code in your region. Striped coatings are sometimes used for the benefit of those who are colorblind.

Grounding the case solves more than one problem. The simplest problem is worn insulation on the live/hot wire that allows it to contact the case, as shown in [link] . Lacking a ground connection, a severe shock is possible. This is particularly dangerous in the kitchen, where a good connection to ground is available through water on the floor or a water faucet. With the ground connection intact, the circuit breaker will trip, forcing repair of the appliance.

Part a shows a person receiving shock as the ground connection is broken. Part b shows a diagram similar to part a but with proper ground connection so that the person does not receive a shock.
Worn insulation allows the live/hot wire to come into direct contact with the metal case of this appliance. (a) The ground connection being broken, the person is severely shocked. The appliance may operate normally in this situation. (b) With a proper ground, the circuit breaker trips, forcing repair of the appliance.

A ground fault circuit interrupter (GFCI) is a safety device found in updated kitchen and bathroom wiring that works based on electromagnetic induction. GFCIs compare the currents in the live/hot and neutral wires. When live/hot and neutral currents are not equal, it is almost always because current in the neutral is less than in the live/hot wire. Then some of the current, called a leakage current, is returning to the voltage source by a path other than through the neutral wire. It is assumed that this path presents a hazard. GFCIs are usually set to interrupt the circuit if the leakage current is greater than 5 mA, the accepted maximum harmless shock. Even if the leakage current goes safely to ground through an intact ground wire, the GFCI will trip, forcing repair of the leakage.

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Source:  OpenStax, University physics volume 2. OpenStax CNX. Oct 06, 2016 Download for free at http://cnx.org/content/col12074/1.3
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