I already set up my breaker box and ran 3-0 awt wire but an electrician looked at it and said to change it to 2-0 awt and 1-0 awt... do I HAVE to change it? It would cost me more money if the 3-0 is fine to use...

If you used 3/0 aluminum as SE , it is only rated at 175 amps. Did you look at Ampacity charts before wiring?

Hi,
Actually, a friend said he could do all the wiring from the outside meter loop to all the indoors and me, wanting to save money I jumped at it... big mistake... sam houston electric came to inspect meter loop and said everything was wrong... so I hired an electrician that is willing to do the repairs to the meter loop and he will offer consulting and some work for indoor circuits as well... he said to change out the 3-0 awt wire for 2-0 and 1-0 and I was just wondering why

For a residence what is benefit of 2-0 or 3-0 or 1-0 awt... why would a person put 2 instead of 3 or vice versa

Oh, by the way thank you for taking your time to answer

What are the functional reasons for the different... choosing 2-0 over 3-0 awt

The big reason is the ampacity of the wiring. Not sure what you mean by changing to 2/0 and 1/0. I believe the electrician said 3 aught which is the old way of saying 000 but now modern use is 3/0AWG. This is the service entrance from the meter to the breaker box? Aluminum wire? SE wire is rated differently than interior house wiring. For example, a 12 AWG is rated 5 Amps more than a 14 AWG, 10AWG is rated 10 amps more than 12AWG. With service entrance, SE, the larger the number the more ampacity. 1/0-2/0-3/0-4/0 and then wire gauge changes to KC mil. Let a qualified electrician do the work. Why tempt burning down a house.

3/0 AWG (Copper) is listed for 200 Amp. 3/0 AWG (Aluminum) is listed for 155 Amp.With a 200 service you would have to use 3/0 AWG Copper or 250kcmil AWG Aluminum (205 Amps)

Or leave the 3/0, Install a 150 Amp Breaker, (need to do load calculations)call it a day, neutral is commonly a size smaller, as the Neutral carries the difference of the 2 Main Hots. If Black phase is drawing 80 Amps, and Red Phase is drawing 90 Amps, The Neutral will be drawing 10 Amps. If not 10 Amps, Current is flowing through the Ground.
AC and 240 Volt Water Heaters Draw equally on both Phases. No Neutral Load.