In nonstick skillet over high heat, bring water, 1 cup evaporated milk and shells to simmer. Season with salt, to taste. Cook, stirring, until pasta is tender and liquid thickens, 9-12 minutes.
In small bowl, whisk remaining evaporated milk, cornstarch and dry mustard. Stir into skillet. Continue simmering until slightly thickened, about 1 minute.
Remove skillet from heat. Stir in cheddar and Monterey Jack cheeses in batches, adding water to adjust consistency. Stir in butter then season with salt and pepper, to taste.