Cheddar-Ale Soup

1 tablespoon canola oil
1 large onion, chopped
1 12-ounce bottle beer, preferably ale
2 1/4 pounds Yukon Gold potatoes (cut into 1/2-inch pieces and boiled until tender - about 15 minutes) OR 2 18 oz. bag precooked peeled potatoes (found in cold section)
1 14-ounce can vegetable broth
1 cup water
2 1/2 cups nonfat or low-fat milk
1/4 cup all-purpose flour
1 1/2 cups shredded sharp Cheddar cheese, divided
1 small red bell pepper, thinly sliced or finely chopped

1. Heat oil in over medium heat. Add onion and cook, stirring, until softened, about 3 minutes. Add beer; bring to a boil and boil for 5 minutes. Add potatoes, broth and water; cover and return to a boil. Reduce the heat to maintain a simmer, and cook until the potatoes are tender, about 4 minutes. Remove from the heat and mash the potatoes with a potato masher to the desired consistency.
2. Whisk milk and flour and add to the soup. Bring to a simmer over medium-high heat and cook, whisking occasionally, until thickened, about 3 minutes. Remove from the heat; stir in 1 1/4 cups Cheddar and stir until melted. Ladle the soup into bowls and garnish with the remaining 1/4 cup cheese and bell pepper.