In a medium microwave-safe bowl, combine butter, peanut butter, and chocolate chips.
Microwave on high for one minute. Stir mixture.
Heat for an additional minute and stir again.
Reheat and stir a little more until the mixture is smooth.
Pour the cereal into a large bowl.
Pour the mixture over the cereal.
Stir gently until the cereal is well-coated.
Pour the powdered sugar into a large bag. (paper works better than plastic)
Pour the coated cereal into the powdered sugar.
Shake well until cereal is well coated with powdered sugar.
Lay out wax paper on a counter or table.
Spread the puppy chow onto the waxed paper and allow it to cool and dry.
Store in a covered container or food storage bag until ready to use.
Serve in a brand-new dog dish.