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Melt butter in medium saucepan. Add rice and onion. Cook over medium heat, stirring frequently, 3-4 minutes or until onion is tender. Add water and champagne. Bring to a boil.
Reduce heat, cover and simmer 20 minutes. Stir in cream of mushroom soup, pepper, nutmeg, and, if desired, ground red pepper. Cook and stir 5 minutes, or until creamy and heated through. Stir in red bell pepper and parsley. Sprinkle with cheese, if desired.
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