Bring the water to a boil in a small covered saucepan over medium-high heat. Add the salt and pepper, then cover and reduce the heat to low to keep the liquid hot.

Melt the butter in a large saucepan over medium heat. Add the onion and cook, stirring occasionally, until softened and translucent but not browned, about 4 minutes.

Stir in the rice and cook until the edges of the grains begin to turn translucent and smell slightly nutty, about 3 minutes.

Pour in the hot seasoned water and bring to a brief boil. Immediately reduce the heat to low, cover, and simmer until all the liquid is absorbed, 16 to 18 minutes.

Remove the pot from the heat. Lay a clean, folded dish towel over the top of the pot and replace the lid firmly over the towel; let the rice sit for 10 minutes to finish steaming.

Remove the lid and towel, fluff the rice gently with a fork to separate the grains, and serve warm.