Section 250.24(A)(5) makes it clear that reconnecting a grounded conductor to ground on the load side of the service disconnect is prohibited unless another section in Article 250 allows it. There are only a small handful of sections in Article that allow this and only under specific conditions.

When a grounded conductor is connected to ground in subpanels, metal boxes or other electrical equipment downstream of the service disconnect, if a fault to ground (ground-fault) occurs, the grounded conductor will have multiple parallel paths that the ground-fault current will travel on as it tries to make it back to the source. This can delay the overcurrent device from opening during the fault condition.

The most effective ground-fault current path is the one that has the least resistance. When a grounded conductor has multiple references to ground downstream of the service, ground-fault current can end up traveling back to the source on equipment grounding and bonding conductors which are often much smaller than a grounded conductor which is sized to carry current as its principle function.

Below is a preview of the NEC^®. See the actual NEC^® text at NFPA.ORG for the complete code section. Once there, click on their link to free access to the 2020 NEC^® edition of NFPA 70.

2020 Code Language:

250.24(A)(5) Load-Side Grounding Connections. A grounded conductor shall not be connected to normally non–current-carrying metal parts of equipment, to equipment grounding conductor(s), or be reconnected to ground on the load side of the service disconnecting means except as otherwise permitted in this article.

Informational Note: See 250.30 for separately derived systems, 250.32 for connections at separate buildings or structures, and 250.142 for use of the grounded circuit conductor for grounding equipment.