On July 6, 1994, at 1145 hours Pacific daylight time, the pilot of a Meyers ME 200 aircraft, N7MV, experienced an in-flight fire shortly after departing the airport at Chico, California. The pilot returned to the airport and, after landing, he and his passenger jumped from the aircraft due to smoke and fire in the cockpit. The aircraft received substantial fire damage. The pilot and his passenger received minor injuries. The examination of the aircraft by a Federal Aviation Administration inspector revealed that the left exhaust pipe from the engine had broken in two. The break was at the aft end of the pipe where the exhaust shroud/muff connects to the cabin heat control valve. Examination of the burned wires showed some patches of insulation remaining. However, a large electrical wire between the electronic volt/ammeter and the avionics bus was completely void of any insulation. The pilot indicated no electrical problems and the logbooks revealed no electronic maintenance had been accomplished for some time.