When performing home inspection many times I will have discussions with my clients on the home’s electrical supply and how it is wired. Out of this it was apparent that most people do not have a basic understanding of how electrical power is distributed to and throughout the home. And this is the heart and soul of the modern life.

This is a very general description of how these electrical system works.

In North America for residential and light commercial we use what is referred to a “Split-Phase 240/120V system”.

Electricity is transmitted at very high voltages (110 kV or above) to reduce the energy lost in long distance transmission. This primary power is usually transmitted through overhead or underground power lines.

Then through the use of a step down transformers the primary distribution voltage is reduced for use in a residential application. This is usually located on the utility pole or on a ground transformer.

Most public utility companies limit the maximum Single Phase 240 Volt Service to 600A (240V X 600A = 144kVA) There are some utilities that use a lower limit of 400 Amps, which is 96kVA

A split-phase (240/120V) power system is really a “3-wire, single-phase, mid-point neutral system”, which consists of two 120V "voltage sources" connected out-of-phase by 180 electrical degrees with a neutral connection between them.
                                      
                                                              

This is not to be confused with the lesser known "Two-Phase" system which is 90 electrical degrees out of phase or any "Three-Phase" sources. 

The voltage between the two power conductors (Line-Line, or more commonly known as Hot-Hot) is 240V, therefore the voltage between each line conductor (hot) and neutral is 120V. (Note: voltages normally can vary in real life +/- 10%) 

Volts (E) are the measure of electrical force in a system and Amps (I) is the measure of how much electricity is flowing. Watts (W) is the term used for the rate of consumption in a given application.

Here is an example of a 1200W microwave in a 120V vs. 240V circuit.

We have 1200W appliance, Watts= Volts x Amps, so if we use a 120 v circuit we would be drawing 10 A (1200/120) on the single hot conductor/circuit. If it was a 240v circuit (2 conductors) it would be drawing 5 amps (1200/240) per circuit for 5 total amps.

Most of the standard 120V is for lighting and small appliances and uses this line/neutral configuration. You will see these typically in the panel or at the receptacle as a black and white wire. This will be on a single pole breaker in the panel.

Large appliances, such as heaters, cooking equipment, clothes dryers, and air-conditioners are connected across the two hot conductors (L-L) and operate at 240V, requiring less current (amperage) and smaller conductors than would be needed if the appliances were designed to operate at 120V. Since the current in each leg of a split-phase system is 180 degrees (out-of-phase), the neutral wire carries only the difference of current between the two lines, or zero current when the load on both legs are equally and or perfectly balanced (i.e. consuming equal amounts of power).  So in a 240v system there will be no white wire, just either two black wires or more commonly a black and red conductor. These are on double-pole breaker in the panel.

This is a very general explanation of your homes electrical system. Are we having fun yet ; )

Source:

http://www.ncwhomeinspections.com/Electrical%2Bdistribution%2Bin%2Bthe%2BUnited%2BStates