I thnk it is just heat. If you run your heater you have all that heat that rises and builds up in that area down there, and add the heat generated by the current going through the wires and finally the insulation melts through or off. I would blame it on poorly specd. wires.

1997 T-100 4X4 Xcab,Warn Hubs
02 Camry LE
2008 Yaris