Rinse beans. In a 4- to 4-1/2-quart Dutch oven, combine beans and the 10 cups water. Bring to boiling; reduce heat. Simmer, uncovered, for 2 minutes. Remove from heat. Cover and let stand for 1 hour. (Or, place beans in water in Dutch oven. Cover and let soak in a cool place for 6 to 8 hours or overnight.) Drain and rinse beans.
In the same Dutch oven, combine beans and the 8 cups water. Bring to boiling; reduce heat. Cover and simmer for 1 hour.
Meanwhile, in a large saucepan, cook the onion, green pepper, and garlic in 1/4 cup hot olive oil for 7 minutes, stirring occasionally. Remove 1 cup of the cooked beans and a little of the liquid from the Dutch oven. Add to vegetable mixture in saucepan; cook about 5 minutes, stirring occasionally. Using a wooden spoon or a potato masher, slightly mash beans. Return bean-and-vegetable mixture to the Dutch oven. Stir in salt, black pepper, oregano, and bay leaf. Bring to boiling; reduce heat. Cover and simmer for 1 hour. Discard bay leaf. Before serving, stir in sugar, vinegar, sherry, and the 2 tablespoons olive oil. Makes 6 to 8 servings.