Aluminum wiring, used in some homes from the mid 1960's to the early 1970's, is a potential fire hazard.
According to the U.S. Consumer Product Safety Commission, fires and even deaths have been reported to have been caused by this hazard. Problems due to aluminum wiring expansion, or arcing at the aluminum wiring connectors, can cause overheating at connections between the wire and devices (switches and outlets) or at aluminum wire splices. The connections can become hot enough to start a fire without ever tripping a circuit breaker!
CPSC research shows that "homes wired with aluminum wire manufactured before 1972 are 55 times more likely to have one or more connections reach "Fire Hazard Conditions" than are homes wired with copper. "Post 1972" aluminum wire is also a concern. Introduction of the aluminum wire "alloys" in 1972 time frame did not solve most of the connection failure problems.
Aluminum wiring is still permitted and used for certain applications, including residential service entrance wiring and single-purpose higher amperage circuits such as 240V air conditioning or electric range circuits. The fire risk from single purpose circuits is much less than for branch circuits.
But it's not necessarily because of a "new alloy" as some folks assert. It's because there are enormously fewer connections (four or six rather than 30 or 40 per circuit) and thus statistically a smaller chance of a connection failure. These connections do still burn up, as indicated by field reports.
How to Repair Aluminum Electrical Wiring to Reduce the Hazards - Repair Alternatives & Choices
Once the initial steps above have been addressed here are the choices for safe repair of aluminum wiring:
Aluminum Wiring Repair Method No. 1: Re-wire the Building, Replacing All Aluminum with Copper Wire
Re-wire the Building replacing all aluminum branch circuit wiring with copper, as a "best repair method" for aluminum wiring, OR as a next-best aluminum wiring repair method
Aluminum Wiring Repair Method No. 2: Copper Pigtailing using the COPALUM Connector
Use the special AMP (now TYCO) COPALUM connector and special tool to connect short copper wires to every aluminum wire end in the building, reconnecting the copper to the various devices (outlets, switches, lights) and splices. This "copper pigtailing" procedure is performed by an electrician trained and licensed by AMP or TYCO to use this COPALUM procedure. The TYCO COPALUM connector method is described is described at PIGTAILING USING AMP "COPALUM" CONNECTORS. Typically this approach costs about half that of completely re-wiring a home with copper.