No the wire is not necessary. It should be completely detached and removed so as not to conduct the energy from a lightning strike or a cross between the utility's low and high voltage lines into the house.
The shorter answer is that that Grounding Electrode Conductor (GEC) was protecting the premisses wiring rather than doing anything for the piping it was using as a Grounding Electrode.
The original purpose of that wire would have been to bond the underground metal piping to the Neutral of the Service Entry Conductors. That underground piping would have been used as part of the houses Grounding Electrode System (GES). The purpose of the GES is to provide a low impedance pathway for energy from lightning or power crosses to dissipate into the earth in the case of lightning or to return to its source at the power substation transformer in the case of a cross between utility voltage systems. In that latter case each services GES carries a small portion of the fault current into the earth and the earth itself conducts it back to it's source via the GES of the Utility's substation transformer. In each case the lower the impedance of the GES the lower the voltage rise on the premise wiring system during the overvoltage event. Since the resistance of home wiring insulation is only 300 - 600 volts to ground; depending on when the wire was made; Limiting the time that it is exposed to higher voltages will also limit the amount of damage that will be done to the electrical wiring of the premisses by the overvoltage condition.
If the only other Grounding Electrode is the driven rod or pipe that you mentioned then you should seriously consider upgrading the premise's Grounding Electrode System by the installation of additional Grounding Electrodes. If that installation were being done today the National Electric Code would require the installation of a second driven rod at least 6 feet away from the first one. Although that would satisfy the code enforcement folks it is not what any responsible electrician would call an adequate GES. To install a minimally adequate GES you would dig a trench at least 30 inches deep that is at least 20 feet long. Since the minimum required length of a driven electrode has been 8 feet for many years the trench would need to be long enough to place the 2 rods 16 feet apart if the trench is not in a straight line between the two rods. Dive the second rod through the bottom of the trench so that it has a total depth to it's tip of 10 feet six inches beneath the finished grade after the trench is back filled. Connect the 2 rods together with a number 2 American Wire Gauge bare copper wire (2 AWG Cu) placed entirely in the bottom of the trench. Add enough length to the #2AWG Cu wire to serve as the Grounding Electrode Conductor between the existing rod and the Service Equipment Neutral busbar.
It should be pointed out that the size of this conductor is larger than the NEC would require for a GEC which connects driven rod electrodes to the neutral conductor of the service. It is sized to 2 AWG Cu because in this application it is not serving as only a GEC but also as a Grounding Electrode in it's own right. It is intended that the bonding conductor between the 2 driven rods meet the minimum requirement for a ground ring in that it has a minimum length of 20 feet, is buried at least 30 inches deep, is bare #2 copper or larger, and is connected to the Service Neutral by a conductor no smaller than the Ground Ring conductor.
Many people, including many electricians would say that this is all unnecessary because the present driven rod met the code requirement when it was installed and it is therefore all that the Authority Having Jurisdiction (AHJ); read as the local code enforcement official; could require. Those who take this position completely ignore one of the basic tenants of the NEC that is stated in NEC 90.1 vis
"90.1 Purpose.
(A) Practical Safeguarding. The purpose of this Code is the practical safeguarding of persons and property from hazards arising from the use of electricity. This Code is not intended as a design specification or an instruction manual for untrained persons.
(B) Adequacy. This Code contains provisions that are considered necessary for safety. Compliance therewith and proper maintenance results in an installation that is essentially free from hazard but not necessarily efficient, convenient, or adequate for good service or future expansion of electrical use.
Informational Note: Hazards often occur because of overloading of wiring systems by methods or usage not in conformity with this Code. This occurs because initial wiring did not provide for increases in the use of electricity. An initial adequate installation and reasonable provisions for system changes provide for future increases in the use of electricity."
The reason that AHJs must except pre existing, non conforming; as regards current code; installations has everything to do with Constitutional Law and nothing to do with electrical safety or best practice. The Constitution of the United States has a nearly absolute prohibition against making an action unlawful after that action has occurred. That type of enactment is known at law as an Ex Post Facto; after the fact; enactment. A discussion of why that prohibition is enshrined in the Constitution would need to go into the history of legal abuses that the nations founders were trying to prevent and would be much too involved for this format of discussion as well as arguably off topic. In other words please take my word for the fact that legally enforceable standards cannot be applied retroactively to previous installations.
Does that mean that those existing installations are somehow magically immune from the laws of physics? Each addition of the NEC is supposed to represent what the entire electrical industry has learned about what it takes to make an essentially safe installation which is free from hazards. At it's best the current addition of the NEC should represent the state of the art in electrical safety. That does not mean that existing installations are somehow inherently just as safe as a new installation that mees the present requirements of the NEC.
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Tom Horne
