I want to add a 50 amp 220V circuit breaker to my split bus panel to supply a welder. I have two options. One option is to use the empty slot (blue arrow) or replace the spare 220v breaker that is currently not doing anything (red arrow). If I understand correctly, both options will keep me in compliance with the 6 throw rule. The "problem" is that both option are above the split (dashed green line) and are always hot because I don't have a main disconnect. My questions are (1) how do I replace these circuit breakers safely and which option would be better (red arrow or blue arrow). Thanks.
6 of one, half dozen of the other on the red or blue arrow issue. You can plug a breaker in hot (assuming you know the proper safety precautions). I would probably swap out the unused one, just because the panel cover would not need to be altered (I'm lazy).
If you are uncomfortable working on live equipment, you can ask the utility to disconnect you (pull the meter). Generally that means they come out and do it one day, then come back and put it back in the next day. SOMETIMES you get lucky and they do it faster, but you can't count on it, so be prepared to have no power for a day. If you have one of the new "Smart Meters", they often have a remote disconnect capability so the utility simply sends it a signal to disconnect or reconnect, so it can be just minutes.
It really dose not matter as they are both connected to the service. The way I have always worked on panels is to always turn the breaker OFF prior to removal or installing. Many modern machine controll center "buckets" require the breaker to be OFF to install or pull the bucket. I have seen breaker contacts melt where the breaker was not turned off and the electrician kept trying to snap it in, he ended up ruining that breaker and that position on the panel. I have never had a problem with the breaker turned off. As far as the comment on the single pole in the top it is still only 6 so it would be legal as long as the top right is left unused.
With either position, you have two choices
With a "rule of six" service panel like this, you have two options for installing/replacing breakers in the service section:
Work it "hot" as Ed Beal describes, with the breaker-under-installation turned OFF as bus stabs/breaker jaws are not load break rated. Likewise, if you are removing a breaker from the service section, you will need to turn it OFF before removing it.
Have your utility cut power to your house for the duration of the work. This is the safer approach, provided you can tolerate the power outage for the duration of course. It's also surprisingly practical: in today's smart-metered age, most electrical utilities will cut power to your house during business hours without charge. Simply call your utility on their customer service number during normal working hours and they should be able to walk you through the process.
The presence of the single-pole breaker in the service section is fine for the moment as you are not exceeding the six-throw limit on service disconnecting means, even with the added welder breaker. However, as far as I know, Siemens (ITE/Gould) breakers were never labeled to accept two wires under a lug, so that double tap on the 20A single pole breaker needs to be fixed.
Simply turn off the breaker in question, remove the wires from it, install a short length of #12 wire on the breaker to serve as a pigtail, wirenut the two wires you removed from it to the pigtail, and turn it back on again. (Anyone who complains about wirenuts in panels should go read the current version of NEC 312.8(A) as it was rewritten to dispel prior confusion on the subject.)