Place potatoes in a large saucepan and cover with water. Bring to a boil. Reduce heat; cover and cook for 30-40 minutes or until tender. Drain and refrigerate several hours or overnight.
Peel potatoes and coarsely shred. In a saucepan, heat the milk, cream, salt, mustard, pepper and nutmeg over medium heat until bubbles form around side of pan. Reduce heat; add cheese, stirring until melted.
Place potatoes in a greased 13-in. x 9-in. baking dish. Pour cheese sauce over potatoes. Bake at 325° for 50-55 minutes or until heated through.