In a large skillet, combine ground beef, onion, and green pepper and cook until ground beef is browned.

Drain beef mixture and return to skillet.

Add tomato sauce, taco seasoning, and water to skillet and mix.

Bring to a boil, reduce heat and simmer for 10 minutes.

Stir in green chiles, 2 c cheddar cheese, and cooked macaroni.

Spray a 2 quart casserole dish with non-stick spray.

Pour contents from skillet into casserole dish.

Top with remaining 1/2 c cheddar cheese.

Place casserole into a preheated 350 degree oven.

Cook, uncovered, for 30-35 minutes, or until cheese is melted and taco casserole is heated through.

Use half a can of green chiles to reduce spiciness.