Step 1Rinse beans, then soak overnight in 2 quarts water. Drain. Place beans in 2 quarts fresh water and bring to boil over medium-high heat, 10 minutes. Add onions, garlic, bell pepper, bacon, tomato sauce, salt and pepper. Cover and simmer 2 hours. Uncover and simmer 30 minutes.
Step 2Mix chili powder and cold water into smooth paste in small bowl and add to beans. Simmer 30 minutes more.