Maybe a wire from some other branch circuit popped outta somebody's hand and inserted the end of itself right in the center of that screw.
Everything else looks OK.
That screw would be a pain to replace in accordance with NFPA 70E wouldn't it?
I kind of had that feeling all along. If a wrench was in the socket of the lug there should be a burn mark wherever else the wrench contacted. With (assuming service conducors) this not having any overcurrent protection probably would have melted more than it did.
If someone was making up the branch circuits while the lug was live and had a conductor slip and touch here it could easily do what we see here.
Someone could have had a cheap test meter set to ohms (oops) and touched a test lead here, seen the aftermath of that a few times, meter probably looked much worse.
I don't think that is a recommended thing to do according to 70e either.
We do not know if it can or cant be torqued. I do not check every lug i see. I would have replaced it if i had 1 on truck but if not would be costly for an extra trip that likely fixes nothing. Probably would done same as Scot and would tell customer it is his option. If they say replace then you have another easy service call.
DO NOT PULL THE METER . Poco in some areas do not allow that. If you add waiting on poco to do this repair it could get very costly.
This depends on the POCO. Where I live in a low poplulation area is not a problem at all. All the complaints I see on this site about scheduling with a POCO are always in higher population areas. I do not doubt what you say but your situation does not apply to everyone.
If I wanted to change that lug most POCO around here would ask when I want to do it, and for no longer than it would take would wait for me to do my job and then re energize the service when I am finished. We may even go to coffee shop or lunch together afterward. I know most of the empolyees at the POCO's I work with regularly.