In a saucepan, heat milk just until bubbles form around the edge; remove from the heat and stir in brown sugar. Stir until dissolved then set aside. Meanwhile, combine warm water and yeast. Let stand for 3 minutes then add the cooled milk mixture. Beat in flour until smooth. Cover and set aside for 45 minutes to rise.
Stir down the dough then gradually add flour, baking powder, and salt. Place on a floured surface and knead for 5 minutes, or until smooth and elastic. Roll into a 16' x 10-inch rectangle then cut into 1/2-inch wide strips. Roll each strip into a rope and twist into large pretzels. Let rise about 30 minutes.
Bring a large kettle of salted water to a boil. Preheat the oven to 400 degrees. Lower the pretzels gently into the boiling water for about 5 seconds then remove and place 2-inches apart on a greased baking sheet.
Beat egg and water and lightly brush the pretzel tops. Sprinkle with coarse salt and bake at 400 degrees for 18 to 20 minutes, or until golden brown.