Prepare piping bag. If a one-use bag, cut off only as much of the corner as needed for the piping tip to fit through. The hot dough will push the tip further than your hole will anticipate.
Combine water, sugar, baking powder, salt, and oil in a saucepan over medium heat. As soon as mixture begins to boil, add in flour and mix vigorously until tacky and smooth. Remove from heat and beat in eggs. While mixture is still hot, transfer mixture to a decorating bag fitted with a large star tip and place in the freezer.
Make chocolate sauce by combining cream and chocolate chips in a saucepan over low heat to melt. Once melted, add sour cream and chile powder. Stir until fully combined.
Heat oil for frying to 375 degrees. Pipe strips of churro dough into fryer, making sure to move the piping bag across the surface of the oil to prevent churros from curling. Fry until they float to the surface of the oil and are golden brown, about 5 minutes. Drain on paper towels.
Once the churros have cooled enough to handle, roll them in the cinnamon sugar and serve next to chocolate sauce.