16 gauge wire is fine.
Check if wire gets hot.
Make sure bulb wattage matches 300Watt output of transformer.
If you have less than 300Watts, then bulbs will burn out faster and transformer will burn out.
Replace bulbs as soon as they burn out.
Open following link for troubleshoot and tips:
http://waterheatertimer.org/Malibu-power-pack-stopped-working.html
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