
In most systems, the voltage drop in the circuit conductors should not exceed about 3% to assure satisfactory equipment performance. For example, in heating devices, the heat output varies with the square of the voltage applied to the device. A 10% drop in the voltage results in a 19% decrease in the heat output. Under the same conditions, the input current at rated mechanical load to a motor would increase about 11% and the heating of the motor conductors would increase about 23%: a dangerous condition.
The voltage at the terminals of any device experiences drops in the transformer supplying the circuit and also some variations in the voltage on the utility lines. While electric utilities have narrowed the variability of service voltage, some leeway must be designed into the system for the changes in the load drawn by the aggregate of customers. The American National Standard for Electric Power Systems and Equipment (ANSI C84.1-1982) is the commonly accepted guideline for tolerable limits.

This ANSI C84.1-1982 recognizes two voltage ranges, Range A (the tighter range) and Range B (for infrequent and temporary conditions). For Range A, the service voltage may drop by 5% below the nominal value and the utilization equipment. For Range B, (other than lighting loads), voltage might drop by as much as 10% - but with reduced effectiveness. The difference between these two voltage ranges is "intended to allow for voltage drop in the customer's wiring system." This "wiring allowance," then, is 5% for non-lighting loads, and only 3% for circuits supplying lighting loads.
It is recognized that an electric utility might hold its service voltage to tighter limits (which would permit larger voltage drops in the customer's wiring). However, prudent design would not rely upon that. As a consequence, the voltage drop in the wiring for the overall circuit from source to load should not exceed 5%. A fine-print note to NEC Articles 210-19(a) and 215-2(b) states that the maximum total voltage drop on feeders and branch circuit conductors combined should not exceed 5% if reasonable efficiency of operation is to be obtained. The tighter limits of 2% in feeder conductors and 1% in branch circuit conductors is considered the desirable limit by many designers.
Voltage Drop Tables: Wires In Conduits