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- Bring 5 cups water and chocolate to simmer in medium saucepan, stirring to dissolve chocolate.
- Mix in ¼ cup cream. (Can be prepared 1 day ahead. Cover and refrigerate. Bring to simmer, stirring frequently, before continuing).
- Whip 1 cup cream and powdered sugar in medium bowl until peaks form.
- Drizzle caramel over and swirl together, forming streaks (do not overmix).
- Divide hot chocolate among 6 mugs.
- Top with generous amount of caramel whipped cream and serve.