Add the butter and olive to a large Dutch oven over medium/high heat to melt.
Add in the onions, salt, pepper, garlic powder, and nutmeg. Cook, stirring occasionally until the onions become soft and slightly translucent (about 10-15 minutes).
Stir in the granulated sugar and allow it to melt (about 2-3 minutes).
Stir in the flour. Stir and cook for an additional few minutes. The onions should become thick and pasty at this point. If not, add a little bit more flour.
Remove from the heat and stir in the grated cheeses until melted.
Carefully spoon the onion cheese mixture into a 5-6 quart casserole dish that has been lightly sprayed with cooking spray.
Cover the top of the onions with the panko bread crumbs and drizzle the top with the melted butter.
Bake (uncovered) in a preheated oven for 35-40 minutes.
Remove from the oven and allow it to cool about 10 minutes before serving.
Notes
Store any leftovers in an airtight container in the refrigerator for up to 5 days.May be frozen. Cool completely and store in an airtight freezer container or bag for up to three months. Thaw overnight in the refrigerator.