Mississippi’s Public Service Commission scheduled a “show-cause” hearing over Holly Springs’ troubled utility department for Sept. 4 at 9 a.m. at New Albany Municipal Court.

The PSC announced the hearing during a docket meeting Tuesday, a week after it released a third-party report detailing the struggles of the power provider. The report echoed previous criticisms from state lawmakers, the PSC, the Tennessee Valley Authority and others blaming Holly Springs officials for not investing in its power supply system over the years and allowing it to deteriorate to a point where customers have seen constant outages.

Holly Springs, which buys power through a contract with TVA, serves about 12,000 customers in Marshall, Benton and Lafayette counties as well as a small part of Tennessee.

The PSC, which regulates utilities in the state, initially tried to schedule a hearing for Jan. 7 in Jackson. But Holly Springs successfully appealed after arguing one of its lawyers, Sen. Bradford Blackmon, needed to be with the state Legislature then. The PSC then agreed to delay the hearing until after the legislative session.

The state initially had no jurisdiction over the Holly Springs Utility Department, but a 2024 bill that became law gave the PSC the power to investigate the utility and recommend, if it decides the utility doesn’t provide “reasonably adequate service,” that a court put the department into a receivership.

“We strongly encourage public participation in the upcoming show-cause hearing, emphasizing that this is more than a procedural requirement — it is critical for HSUD to address the issues raised in the report and to clarify its actions,” the commission said in a press release Tuesday. “By working together, we can ensure that the outcome serves the best interests of the people who rely on HSUD services.”

The company behind last week’s report, Silverpoint Consulting, wrote that it may be hard to find a receiver willing to take on the utility, and instead recommended one of three options: selling the utility to another city or cooperative utility; converting it into a cooperative to open up access to low-interest loans; or seeking eminent domain and condemnation.

Holly Springs is also facing a lawsuit from TVA, which alleges the city mishandled funds from the utility and failed to raise rates when needed. On June 9, though, a federal judge ordered a 90-day stay in the case. Then on July 24, court filings show, both parties told the court they would meet on Aug. 15 to “discuss a negotiated resolution of this action.”