Preheat the oven to 375°F. Coat an oven safe dish (I used a 9 inch round) with nonstick spray.
Place a saucepan on the burner and turn the heat on to medium. Add butter to the sauce pan, once it's almost melted, add the olive oil.
Add in the flour, stir until it smells a little bit nutty, for about 3 minutes.
Add in onion and garlic powder, stir for one minute.
Add 1/4 cup milk, mix well until it forms a paste, then add the milk slowly and gradually until all is added. Stir constantly to avoid lumps.
Stir and cook until the sauce thickens a little bit just enough that it's not watery anymore.
Slice the red potatoes evenly, make sure all the slices have the same thickness.
Arrange the potato slices in the oven safe dish in circles, partially overlapping in a single layer.
Sprinkle shredded white cheddar all over the potatoes.
Pour the white sauce you made in the sauce pan over the potatoes, make sure they're covered.
Sprinkle Parmesan cheese on top. Cover with aluminum foil.
Bake in the oven for 40 minutes covered. Then uncover and bake for an additional 30 minutes until potatoes are fully cooked and the sauce is golden and bubbly.
Serve warm.