battery short out

If our battery where to accidentally short out and start a fire or explode would we be penalized for that?

No, you will be given special Flametrooper Blaze Award after fire marshals are done evacuating the building.

Seriously, if your battery wires are damaged have someone fix it. Or, if you suspect the battery has internal damage beyond your ability to repair, please, secure it with electric tape and recycle at the battery bin of your local electronics or office supply store without exposing anybody to unnecessary risk.

Happened to our team at Worlds during Toss Up season!

The first time something like this randomly happened you should be fine from a rules perspective. However, after the initial “accident” if you knowingly continued to use damaged batteries, wires, etc. and you harmed the field, other robots, etc. you would be subject to:
<S1> If at any time the Robot operation or Team actions are deemed unsafe or have damaged the
Field Elements or Scoring Objects, the offending Team may be Disabled and/or Disqualified by the
determination of the referees. The Robot will require re-inspection before it may again take the
a. Teams should be extra cautious when interacting with Scoring Objects. Damage to Scoring
Objects can be ruled as a violation of <S1>.

Although this covers anything unsafe, most referees would understand that a short from a once-in-a season wire splice was completely accidental and let you go.

I’ve seen refs disable and remove a robot for a smoking motor controller (not a battery) the first time it happened. They didn’t DQ them, from even that match, though, so they got the SP for the loss. And after fixing the problem, they were able to keep competing.

The batteries can be dangerous, and very hard to extinguish if they actually catch fire, so it’s not unreasonable to assume some refs would have you disabled and removed. It’s possible you’d get a match DQ, but unlikely you’d get a tournament DQ. Unless it happened more than once. Then, even if you didn’t do it “knowingly” they might just tell you to quit for the day.