Underground entrance cable rating too low

[AZGuy]

Here in the Phoenix area I often see 1/0 incoming service on panels with 200-amp breakers. I disclose the issue but don't make a big deal about it. In fact, it's better if you don't make this into a huge deal.

One of our clients had the local utility company out to evaluate the incoming service after I noted that 1/0 is rated for 175 amps whereas the panel is rated at 200 amps. The power company charged our client $75 to tell them that everything is fine.

Since I learned about the power company's policy I just write down "Incoming service cable 1/0 175 amps but very common." On most homes it would be a challenge to overload the incoming service, but I've seen 1/0 on 4,000 square-foot homes and that's definitely a potential no-no in my opinion. Even "small" homes sometimes have high electrical demands due to hobbies such as kilns or 240-volt equipment in garages.