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There are several ways to peel a chile pepper: (1) place it about six inches beneath the broiler on a baking sheet, (2) place on an outdoor grill or (3) place on top of a gas stove (my method though be sure to have ventilation cuz it can get a bit smoky).
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Any way you choose, use tongs to turn the chile peppers as they darken.
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The idea is to burn as much of the peel/skin as possible.
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Keep a close eye on the chiles as they may go from blistered to burnt very quickly.
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Once the skin is fully charred, place the hot chiles into a Ziploc bag and seal.
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Set aside for several minutes.
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The steam within the bag will help with removal of the skin.
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Once the chiles are cool enough to touch, carefully make one slit up the side of each chile, keeping the stem intact.
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Gently remove the skin, seeds and membranes from the peppers.
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Gently stuff each chile with a combination of grated cheddar and Monterrey jack cheese until youre just able to close at the slit comfortably.
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If the chile is refusing to stay together, you can try using a toothpick, but I found it unnecessary.
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Whip the egg whites by hand or with an electric mixer until stiff.
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Set aside.
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Combine milk, 1/2 cup flour, egg yolks, baking powder, baking soda, kosher salt, pepper and 1/2 teaspoon of olive oil in a deep large bowl.
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Gently fold in the egg whites until just mixed.
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Pour equal amounts olive oil and vegetable/canola oil to reach 1/4-inch depth in a large, deep skillet.
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Heat oil over medium-high heat.
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In a shallow bowl, spread out 1/4 cup flour.
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Roll each stuffed chile in the flour and gently shake off all excess flour.
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Dip chile into batter, holding the chile by its stem.
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Cover the chile as much as possible with the batter up to the stem, but leave the stem uncovered.
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The stem will be your holding/flipping device.
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Quickly transfer to hot skillet.
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Cook each chile until lightly browned on both sides.
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Transfer to a plate lined with paper towels until ready to serve.
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Serve quickly if possible, and with some chile relleno sauce (see below for recipe instructions).
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For the sauce:
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Heat oil in medium-large sauce pan over medium heat.
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Add onion and cook until sweating, about 5-8 minutes.
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Add kosher salt, pepper and garlic and cook for an additional 2 minutes, stirring occasionally.
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Add flour, tomatoes and oregano and cook until thickened, about 5-8 minutes.
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Add stock and bay leaf and bring to a boil, cooking for about 10 minutes.
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Remove bay leaf and discard.
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Using a stick blender, blender or food processor, puree the sauce until smooth.
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Serve with chiles rellenos.
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Enjoy!