The state Public Service Commission said Tuesday it plans to contest a recent decision by a chancery court placing a receiver over the long-struggling Holly Springs electric department.
After a hearing in Holly Springs last week, Lafayette County Chancery Judge Lawrence Little appointed Michael Watson, a consultant that the city hired last year, as receiver over the utility. The power provider, which serves about 12,000 customers across multiple counties in north Mississippi, has for years dealt with frequent and prolonged power outages due to deferred maintenance and low revenue. It also faced challenges billing its customers.
In response to those issues, the PSC, which regulates utilities in the state, last year deemed the utility unable to provide adequate service and petitioned the judge to place the Holly Springs electric department in a receivership, leading to last week’s hearing.
“For years, families served by (Holly Springs’ utility) have lost power for days at a time; food spoiling in refrigerators, medical equipment going dark, refrigerators and HVAC units burned out by a system that could not deliver steady service,” Northern District Public Service Commissioner Chris Brown said in a press release.
While glad Little removed control of the utility from the city, Brown disagreed with placing Watson in charge. The PSC is now planning to file a motion to reconsider, the release said, and will also request a forensic audit of the utility.
A light pole covered in vegetation stands near Holly Springs, Miss., on Wednesday, Dec. 4, 2024. Poor maintenance has been a persistent issue for the Holly Springs Utility Department, contributing to years of unreliable power and worsening conditions during the 2023 ice storm. Credit: Eric Shelton/Mississippi TodayBrown argued placing Watson in charge “does not change who has been running this utility.” Watson started as a consultant for the city nine months ago, according to court filings. City officials said after last week’s hearing that the system has already seen improvements, specifically with outages, since Watson came on board.
Little released his written order on Monday, marking the start date of Watson’s receivership. The order details the receiver’s powers and responsibilities in running the utility. Among those, the order places all assets owned by the electric department under the receiver’s control. Watson will be paid from the system’s revenue in an amount Little will determine later.
“The Receiver shall assume and maintain sole control and responsibility for the operation and management of the affairs of the HSUD electric system to preserve its assets and serve the best interests of its customers,” Little’s order said, adding that the receiver has broad authority to carry out his duties.
“This includes the immediate authority to correct system failures, rebuild unmaintained substations, reclaim overgrown rights-of-way via robust vegetation management, and stabilize the down (meter) network and billing cycles.”
The order gives Watson “sole discretion” over the department’s employment and contracts. It also prevents Holly Springs officials from interfering “in any way” with the receiver’s work.
Concerned residents listen during a Public Service Commission hearing on whether Holly Springs should retain control of its utility department, at the municipal court in New Albany, Miss., on Thursday, Sept. 4, 2025. Credit: Eric Shelton/Mississippi TodayLittle’s order does not set a time length for Watson’s receivership, leaving it in the court’s discretion as to when it will transfer control of the utility either back to the city or to another party. While in charge, Watson has to file status reports with the court at least every 45 days.
The order also prohibits the city from transferring any payments in lieu of taxes from the utility to Holly Springs without Little’s approval, as city officials have done in the past.
Alleged mishandling of those payments are part of a federal lawsuit Holly Springs is facing from the Tennessee Valley Authority, which has had a wholesale power contract with the city since the 1930s. As of last week, the city was behind on its payments to TVA by $18 million.
The parties met as part of a settlement conference on Monday in federal court. In a Wednesday order, U.S. Magistrate Judge Jane Virden scheduled a final pretrial conference for July 13.
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