Cook bacon in a large saucepan over medium-high heat until crisp. Remove bacon from pan, reserving 2 teaspoons drippings in pan.
Add onion, chili powder, and mustard to drippings in pan; sauté 3 minutes. Stir in bacon, water, and remaining ingredients; bring to a boil. Reduce heat, and simmer 7 minutes. Partially mash beans with a potato masher.