Preheat oven to 350°F. Coat a 3 quart casserole dish with cooking spray. Set aside.
In a small saucepan, melt the butter and then whisk with flour until it forms a paste. While whisking, pour in milk until smooth. Add the bay leaf, salt, pepper, onion and garlic powder. Bring to a low simmer.
Remove the saucepan from heat and whisk in 2 cups of the cheese. Whisk until cheese has melted and sauce thickens. Set aside.
Peel potatoes and evenly slice to 1/4 inch or less thick. Place in cold ice water to prevent browning (optional).
Remove the bay leaf from cheese sauce.
Place half of the sliced potatoes in the prepared baking dish. Pour half of the cheese sauce over the top. Add remaining potatoes and top with the remaining cheese sauce. Cover tightly with aluminum foil.
Bake covered for 60 minutes.
Take the baking dish out of the oven and remove the aluminum foil. Top with the remaining 1/2 cup of shredded cheddar cheese and return to the oven uncovered. Bake for an additional 20 minutes or until potatoes are soft the whole way through.
Remove and allow to sit for 15 minutes before slicing and serving.
Optionally, top with additional salt and pepper, bacon, scallions or chives.
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