The effect of polystyrene on electric cable / wire insulation can be very dramatic to look at, sort of skin cancer for plastic.
If you can imagine something like UHU glue being dabbed on the cable in big blobs and bits of polystyrene stuck to it which are impossible to remove completely.
The polystyrene and the insulation literally melt together and the damage can completely eat through the insulation to the wire if given time.
Before the inert forms of loft insulation became more common in the 1970's bags of broken pieces of polystyrene were sold for that purpose, (there must be hundreds of houses with damaged mains wiring), and it has been used for insulation in the cavity walls of property for some years, my own property has it so any cabling that passes across the cavity has to be done with that in mind. Being a bungalow cables now go over the top of the side walls but some installed before we moved in were damaged. The armoured type of cables used for garage feeds or from external meter cupboards to internal fuseboxes, from what I have seen, do not have the same problem, due to a different chemical composition of the insulation to that of normal T&E (twin & earth). No doubt someone will correct me if I am wrong.
There is a problem for people like myself who are using baseboards with a polystyrene core, White Rose Modelworks in my case, when putting in the track feed droppers as they will be affected in time. I am intending to fit a suitable size sleeve, probably metal as opposed to heat shrink, through the top and the 40mm of polystyrene core.
Although this adds to the cost, the advantages of not having to consider framing when locating point motors etc. and the deeper sides (99mm) giving a 50mm space inside the frame for DCC decoder boards and connectors is, in my case well worth it.
There was a warning about using polystyrene for scenery and laying the wiring in/on it in, if I recall rightly, the June edition of Model Rail.
Sorry to ramble on a bit but it is something that needs to be considered when choosing the scenery materials and if anybody does use it, I would not recommend shaping it with a hot wire or anything else unless there is VERY GOOD VENTILATION with some form of extraction preferably. The fumes are not nice to say the least especially if you suffer from chest or lung problems - just don't consider it in these cases.