Spray 13×9-inch baking dish with nonstick cooking spray. Place half of English muffin cubes into prepared baking dish, sprinkle with half of Canadian bacon. Top with remaining English muffin cubes and Canadian bacon.
Whisk milk and eggs together in bowl. Season with salt, pepper, and onion powder. Pour egg mixture evenly over ingredients in baking dish, gently pressing down to soak English muffin cubes. Cover; refrigerate 4 hours or overnight.
Heat oven to 350°F.
Bake, uncovered, 45-55 minutes or until puffed and golden brown and knife inserted in center comes out clean.
Place egg yolks and water into 1-quart saucepan, whisk until well mixed. Cook over low heat, whisking constantly, 2-3 minutes or until egg mixture begins to thicken. Add softened butter, one tablespoon at a time, whisking constantly, making sure butter melts slowly and sauce begins to thicken without scrambling eggs. Slowly whisk in lemon juice, Dijon mustard and hot sauce.
Serve egg bake warm topped with hollandaise sauce. Sprinkle with paprika, if desired.