In a 1 quart microwavable bowl, microwave chips, butter, lemon peel and juice uncovered on high for 1 minute; stir. Microwave about 30 seconds longer or until mixture can be stirred smooth. Pour mixture over cereal, stirring until evenly coated. Pour into 2-gallon ziploc baggie.
Add powdered sugar. Seal bag; gently shake until well coated. Spread on waxed papaer to cool. Store in air tight container.