In large saucepan, melt butter over medium high heat. Add flour and cook for 1-2 minutes or until well combined and bubbling; mixture will be thick and lumpy. Slowly whisk in milk. Continue to whisk periodically until milk begins to boil and thicken. Remove from heat and add salt, ground pepper, ground cayenne pepper, smoked paprika and nutmeg; stir to combine. Add white cheddar cheese and stir until fully melted.