How many thermometers do you have in your iguana's cage? If you only have one are you sure it's accurate? perhaps what you thought were the correct temperatures really were too high, and now that you've turned the temp down a bit you've got it right.
Depending on the size of your cage you should have two or three themometers. One in what you think is the warm area, and one in what you think is the cool area. A third thermometer that you are sure is accurate can be used to spot test the temps where you have your other thermometers placed just to be sure that the readings are correct.
So what exactly are your day and night time cage temps?
The second potential problem - you have a plug or an electrical connection IN the cage? Is that where the light plug is attached to an extension cord or something? If I were you I would make sure all electrical connections are outside the cage.
Find out at a hardware store how to cut the electical cord and re-attach another plug onto it if that's what you have to do to push the cord through a hole in the wall of the cage to get the plug attachment OUT of the cage.
As you've discovered electrical connections inside the cage could be a hazard. If your iguana manages to spill water on the connection again, or even if he say poops off the ledge and it hits the electrical connection that could end up causing the electrical connection to short and result in you have to replace the light fixtures or whatever else was connected, and or the electrical connection getting wet could pose a shock hazard to the iguana or even yourself. Also, if a problem with the electrical connection being in the cage did result in smoke damage, a fire or injury your insurance company might find you at fault and not cover the damages (maybe).
How is your cage set up? Is it easy for your iguana to get up and down from the basking area? If the angles are too step or if your branch or ramp is too narrow or doesn't feel secure enough for your ig to use it might be avoiding moving from the basking area for that reason. Or perhaps the rest of the cage is not warm enough and the ig doesn't like moving from it's warm area. (try to think like an iguana

)
As for the newspaper ... while it's inconvient that he might spill the water when he burrows under the paper, it's fairly normal behaviour for an iguana. I've heard of lots of igs that like to burrow under towels or blankets to sleep.
My iguana Napoleon (no longer around

) used to love to burrow under a towel at night. He eventually trained us to put out a folded hand towel near his bed time and he'd go and lie with his head resting on the towel (nice pillow) and then we'd cover him up with his towel. He loved it and it used to suit me just fine 'cause I like to read at night and he was a free roamer in our bedroom so I knew that the light wasn't bothering him.
