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I just dealt with this. The individual wire's insulation was totally rotten. I started stripping the black overall insullation back but didn't find decent wire insulation underneath. I finally stopped and taped the wires. Couldn't figure why the insulation would disolve when it was not exposed.

My guess is that your steel framing will be fine but it will be pretty hard on everything else. It all can be fixed.

If you are going to back flush this with your house water system. Make sure that your faucet has a back flow preventer, and that you don't loose pressure in your well.