Peel and grate potatoes and onion. Transfer to a sieve or kitchen towel and squeeze out excess water. In a large bowl, combine grated mixture, egg, baking powder, flour, and salt. Warm a thin layer of oil (about 2 tablespoons) in a large, heavy skillet over moderate heat. Drop batter into skillet one heaping spoonful at a time (but don’t crowd the pan). Flatten gently; don’t push potatoes too hard into oil. (Each latke should be about 2 inches wide.) Fry in batches, turning once, 4 minutes per side or until golden brown. Drain on paper towels and season well with salt and pepper. Add a dollop of sour cream or applesauce, garnish with fresh chives, and serve immediately.