PREHEAT oven to 350º F. Grease 8-inch-square baking dish.
BRING water to a boil in medium saucepan; slowly stir in grits. Cover; reduce heat to low. Cook, stirring occasionally, for 5 to 6 minutes. Add 1 1/2 cups cheese, evaporated milk, garlic powder and hot pepper sauce; stir until cheese is melted. Add sausage and eggs; stir well. Pour into prepared baking dish.
BAKE for 1 hour. Top with remaining cheese. Bake for an additional 5 to 10 minutes or until cheese is melted and golden brown. Let cool for 10 minutes before serving. Season with ground black pepper.
NOTE: Batter can be made the day before; cover and refrigerate. Let stand at room temperature for 30 minutes before baking.