Make meatballs - Mix together the ground beef, sausage, bread crumbs, 1/3 cup evaporated milk, onion and chili powder. Shape into small balls and brown in skillet. Only brown 10 to 15 meatballs at a time. When all are slightly brown, return all to skillet. Cover skillet and let cook on low heat for 10 minutes. Remove meatballs to a 2 ½ quart casserole dish. Remove any grease from skillet but not the browned drippings or pieces of meat.
Make the sauce - In the skillet, combine the cream of mushroom soup, cream of celery soup, 1 cup of the evaporated milk and the water. Heat until steaming but not boiling. Pour over meats in casserole dish. Set aside.
Make biscuits for topping - In medium bowl combine flour, baking powder and chili powder. Cut in the shortening. Beat together the egg and 1/3 cup evaporated milk and add to flour mixture. Stir dough until it clings together. It will be a sticky dough. Knead about 10 times. Roll out to approximately 10” x 12” rectangle on floured board. Sprinkle with cheese. Starting on the long side, roll up carefully. Cut the roll into 8 to 10 slices. Turn slices on their side and flatten slightly with your hand and place on top of casserole.