We install stationary, residential, backup power systems. The neutral is not switched in the transfer switch therefore I would understand that these installations are not "separately derived systems." For whole house applications, I've been advised that some of my competitors are coming from the meter socket, into a disconnect, and into the pre-existing service panel using 3 wire. At the service panel they leave in place the bond between the grounded conductor "neutral" and the grounding conductor so they don't have to separate the neutrals and grounds in the panel. They run 3 wire from generator to the transfer switch and a ground rod at the generator. This would really cut my costs if I could do this BUT I've been schooled that the code (2005 NEC) rqrmt in 250.24 (1)means the bonding of "neutral" and "ground" conductors needs to be at the first disconnect on the load side of the utility meter and that there needs to be 4 wire running from this first disconnecting means on. This means I must separate the grounds and neutrals at the existing svc panel which now becomes a sub-panel. I would like some input from this forum as to what is rqrd. Thank you.