The Mississippi Public Service Commission voted Tuesday morning to initiate daily fines of up to $12,500 against the city of Holly Springs as long as it violates state law regarding providing utility services.

The vote, which was unanimous, comes after a hearing the PSC held in New Albany last week over Holly Springs’ long troubled power provider. At the hearing, the commission made two decisions: to declare that the city had “failed to provide reasonably adequate service,” violating state law, and to petition a chancery judge to place the utility into a receivership.

Holly Springs’ utility department serves about 12,000 customers in north Mississippi, most of whom live outside the city limits.

Northern District Public Service Commissioner Chris Brown, whose constituency includes Holly Springs, explained the PSC has discretion over how often and how long to impose the fines, as well as how often the city has to pay what’s owed. For instance, Brown said, if the utility does end up in a third party’s hands or being bought, the PSC can end the fines.

Money from the fines, he added, would go to the state’s general fund. Brown said the PSC could then request the Legislature to appropriate those dollars back to whoever is running the utility.

“This problem has been decades in the making,” he said during Tuesday’s monthly docket meeting.

Brown also noted allegations that Holly Springs has misappropriated funds meant to be reinvested into the utility. Those claims are at the center of a lawsuit the Tennessee Valley Authority, which sells power to the city, filed against Holly Springs earlier this year.

Central District Public Service Commissioner De’Keither Stamps asked his colleagues where the money for fines would come from, before concluding they’d likely have to come from Holly Springs taxpayers. Stamps also said the city took steps Monday to address recommendations made by Silverpoint Consulting in a July report.

“Does that not signal to this body that the entity is making appropriate steps to improve the system?” Stamps asked.

Brown responded that the city has had plenty of chances already, and that the fines are meant to motivate local leaders.

“The people in that district have obviously been suffering under a system that has failed them for decades,” he said. “Although we appreciate their moving to rectify this, that’s exactly why this penalty is being levied, to make sure they understand not providing adequate service is not going to be tolerated by this body.”

Mississippi Today reached out to Holly Springs’ mayor and city attorney and did not hear back before publication.

Fines from the PSC would just add onto recent financial challenges for the small city of just around 7,000 people. In August, Mississippi Today reported that the state auditor’s office diverted $450,000 of Holly Springs’ sales tax revenue — or roughly half of the city’s yearly total — for past-due audits.

The city’s median income is around $47,000 and its poverty rate is about one in four, census data shows. Both figures are worse than the rest of the state’s.

Talking to Mississippi Today after the meeting, Brown said while he understands the city may have trouble paying the fines, the idea is to compel action from local leaders such as selling off parts of or all of its service area to a neighboring electric cooperative.