Mississippi Public Service Commission, February 2025. (Photo from MS PSC on Facebook)
- Holly Springs claims that the daily fines and receivership threat by the Mississippi Public Service Commission “are contrary and preempted by federal law.”
The Mississippi Public Service Commission voted unanimously in September to place the Holly Springs Public Utility in receivership after years of customer complaints about prolonged power outages, being millions of dollars in debt, and failing to heed warnings from the commission.
The PSC’s action came after an investigation, conducted by Silverpoint, found the utility was plagued with numerous deficiencies, from safety to financial shortfalls. It detailed how Holly Springs does not adhere to basic safety functions, such as trimming trees and general maintenance, including no lockout/tag out procedure when equipment is broken. The report also showed that Holly Springs has not completed an audit in several years, which also includes the utility.
Now, the city of Holly Springs has filed a lawsuit in the U.S. District Court for the Northern District of Mississippi claiming that the pending actions by the Mississippi Public Service Commission “are contrary and preempted by federal law.”
The filing states that the PSC’s imposition daily fines of up to $12,500 against the City of Holly Springs Utility Department and the threatened receivership came “without first providing the City adequate time for new counsel to review or a meaningful opportunity to cure alleged deficiencies, contrary to statutory requirements.”
“As of the filing of this complaint, Defendants have not sought nor obtained a valid order from a court having jurisdiction allowing the Defendants to assert authority over the Plaintiff and the Holly Springs Utility Department in the place of TVA,” Holly Springs claims. “The City has been forced into defending itself against an order that is not only unlawful, but dangerous to the stability of municipal self-governance, exceeding the Commission’s lawful powers and intruding on the City’s prerogatives as a duly chartered municipal utility under an exclusive contract with TVA.”
Holly Springs has contracted with the Tennessee Valley Authority (TVA) to provide electricity to its service area since 1935. However, TVA has also sued Holly Springs for breach of contract. That case is also in federal court.
According to the PSC investigation report, Holly Springs is tens of millions of dollars in debt. It owes TVA more than $6 million as well as $3 million to contractors. The report estimates the total debt to be between $20 to $30 million.
The city goes on to allege that PSC Commissioners Chris Brown (R-Northern), De’Keither Stamps (D-Central) and Wayne Carr (R-Southern) are acting “beyond their lawful authority.”
Holly Springs is asking the federal court to declare that the actions of the PSC, and the law the Commission relied on for its actions, preempted by federal law and that the PSC “violated the City’s Fourteenth Amendment’s Due Process rights.” In doing so, the city seeks to halt the fine and threat of receivership.
