In a small saucepan, saute onion in 1 tablespoon butter until tender. Transfer to a small bowl; set aside.
In the same pan, melt remaining butter over medium-low heat. Combine the flour, salt, garlic powder and pepper; whisk into butter until smooth. Gradually add buttermilk and water. Bring to a boil; cook and stir for 1-2 minutes or until thickened. Stir in onion.