The secret to crisp latkes is the removal of as much liquid as possible from the ground potatoes. Serve these plain (they're a fine accompaniment to a roast with gravy), or with sour cream or applesauce.
Preheat oven to 325°F Place 2 baking sheets in oven. Line large bowl with towel. Finely grind potatoes and onion in processor (do not puree). Transfer to towel. Fold towel up around mixture; twist top, squeezing out all liquid into bowl. Let liquid stand 5 minutes. Pour off liquid, reserving any potato starch in bowl. Add potatoes to bowl. Mix in egg, flour, salt, pepper and baking powder.
Heat 6 tablespoons oil in large skillet over medium-high heat. Working in batches, drop 1 heaping tablespoon batter per pancake into hot oil. Using back of spoon, spread to 2 1/2- to 3-inch rounds. Cook until brown, about 3 minutes per side. Transfer to baking sheets in oven. Repeat with remaining batter, spooning off any liquid from surface of batter and adding more oil to skillet by tablespoonfuls as necessary. Serve hot.