Rydberg atom formation is a source of heating in plasmas. The rate of three-body recombination in an ultracold neutral plasma was measured and electron temperature was derived from it using standard equilibrium recombination rates. With large-scale Monte Carlo and particle-in-cell simulations, we have calculated ab initio the rate of excitation, de-excitation, ionization (and recombination) in electron-Rydberg atom collision and investigated the short-time dynamics of three-body recombination in an ultracold neutral plasma. Comparison with observed rates is quite good. Particular attention is paid to the low-frequency microfield effect on Rydberg state cut-off in the plasma.