I got a call today from an excited contractor who was trying to explain something about some wires that sparked when they touched them with their aluminum ladder, and some pipes that had holes blown in them when it happened. I couldn't go there right away, I got there six hours later and here is what I found:
Stapled to the side of the residence is 30 feet of 6/2 SEU running to an outdoor AC unit. The SEU is over 50 years old, and the top layer of insulation is mostly gone, leaving the bare concentric neutral exposed. There is also a copper water pipe emerging from the ground and entering the house close to the wall with a spigot, along with a gas pipe. The plumbers had already been there, the copper pipe had been replaced. The homeowner also took me inside to the utility room and showed me the two copper flex connectors that had been on the water heater. They had pinholes in them. He said that the contractor's aluminum ladder was laying down alongside the house, right wher the cable was. When he picked it up, it made contact with the cable and the water pipe at the same time. There was a big boom and an arc, he said. The pipe blew open and a few minutes later they saw the water leaking out of the utility room from the pinholes in the flex pipes on the water heater.
No breakers tripped. The SEU is protected by an old GE 70 amp breaker, probably from the fifties.
I could not find any burn marks on the SEU. I can't see where contact could have been made with a hot conductor, they were both still insulated under the bare neutral.
Now I am thinking maybe it is a case of an open service neutral, with the neutral on the water pipe. But the plumbers didn't get shocked when they opened the pipes.
I didn't have much time, it was dark and late. So I shut the breaker to the AC off (nobody had thought to do that) and said I'd return to replace the circuit. But I am still kind of baffled as to what actually what happened.