How long are you having your car plugged in? It takes about 3 hours for the block heater to get the motor to its hottest point. And it definitely should be reading more towards the middle of your temp gauge. My block heater worked great for 3 months, then quit. Dealer installed a new one and it's been fine ever since. Sounds like you have a bad heater.
Also with those temperatures I would be running a full synthetic oil, 0W20.