In a large pot, bring the water and milk to a boil.
Add the salt and grits. Return to a boil (on medium) and stir constantly for one minute.
Add the butter, reduce heat to low, and cover with lid. Stirring occasionally, cook for 3-5 minutes or until the butter is melted and the grits have thickened.
Add the garlic powder and both cheeses. Stir occasionally until all cheese is melted.
Add the rotel (do not drain) and mix well.
Pour into a greased 9x13 baking dish and cook for 30 minutes at 350.