In a medium saucepan, melt the butter over med-high heat. Add the flour and cook, stirring, 1 minute. Add the onion and cook another minute. Slowly whisk in the milk and cook until slightly thickened, stirring constantly. Put burner heat to low and add the remaining ingredients, whisking until the cheeses melt and blend in. Add the chopped peppers. Serve with chips! Serves 4-6.