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                                                            Exhibit 10.16.3

[Letterhead]
NRG Generating (U.S.) Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, MN 55403-2445
Telephone (612) 373-5305
Fax (612) 373-8833


May 20, 1996

Mr. Harvey A. Braswell
Stewart & Stevenson Operations, Inc.
2707 North Lake West, 2nd Floor
Houston, TX 77008

Re: Auxiliary Boilers - NRG Generating (Newark) Inc.


Dear Harvey,

Please  refer  to  that  certain  NRG Generating  (Newark)  Inc./Stewart  &
Stevenson Operations, Inc. Operating and Maintenance Agreement, dated as of
May  1,  1996 (the "Newark O&M Agreement") between NRG Generating  (Newark)
Inc. ("NRG Newark") and Stewart & Stevenson Operations, Inc. ("SSOI").

This  letter  is to confirm the mutual understanding and agreement  of  NRG
Newark  and SSOI that the term "System" as used in the Newark O&M Agreement
includes any auxiliary boiler (and any replacement boiler) used to meet NRG
Newark's  obligations  under the Amended Power Purchase  Agreement  or  the
Steam  Purchasing Agreement dated October 3, 1986, as amended, between  NRG
Generating  (Newark) and Newark Group Industries Inc. ("Newark Group"),  so
long  as  such boiler is located within the boundaries of the Newark  Group
facilities located on Blanchard Street regardless of whether such boiler is
regarded  as  owned by NRG Newark or Newark Group.  It is also  our  mutual
understanding and agreement that SSOI will operate and maintain the  Newark
auxiliary boiler under the terms of the Newark O&M Agreement as modified by
this letter.

Nevertheless, we acknowledge that NRG Newark's current auxiliary boiler  is
currently  mounted  on a movable skidmounting system and that  arrangements
are  being  made  by  NRG Newark with Newark Group to  create  a  permanent
mounting  for  it.   We recognize that SSOI's budgets  underlying  the  NRG
Newark  Agreement  did  not  include the operation  and  maintenance  costs
related to the auxiliary boiler.  Consequently, until the auxiliary  boiler
is  permanently installed as contemplated above, NRG Newark  will  pay  the
operation and maintenance costs outside of SSOI's budget cap under the  NRG
Newark  Agreement  to  the  extent that SSOI can  separately  identify  and
document  operation and maintenance costs specifically related to operation
and maintenance of the auxiliary boiler.  Additionally, NRG Newark will pay
the  costs  incurred  in  moving  the auxiliary  boiler  to  its  permanent
installation site.

Subsequent to the permanent installation of the boiler to occur on or about
October 4, 1996 and prior to the effective date of the 1997 budget (January
1,  1997)  at  which time agreement will have been reached on costs  to  be
included in the 1997 budget, all parties agree to review Exhibit F  of  the
Newark O&M Agreement, the Operating Budget, and


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initiate  a Change Order Budget Statement as defined in the NRG Newark  O&M
Agreement  to  accommodate those variable, incremental O&M costs  resulting
from  the  inclusion of the auxiliary boiler as part of  the  System.   The
incremental  costs for the partial 1996 period referenced  here  are  those
that  are  in excess of 1996 Exhibit F Budget estimates for variable  costs
over amounts that would have been incurred.

It is understood that the permanent installation of the auxiliary boiler in
the  Newark  Group facility will encompass interconnection (mechanical  and
electrical)  to  various  Newark Group systems not  under  control  of  the
Operator.   Owner  and Operator agree to review the final  installation  to
define  where  Operator  scope ends and Newark Group's  scope  begins  with
regard to the auxiliary boiler installation.

SSOI  will  not  be  held  accountable for damages,  repairs,  or  emission
excedences  resulting from unavailability of, or the  malfunction  of,  all
equipment  outside  of those connections defined as "customer  connection".
NRG  Newark  agrees  to  indemnify, defend, and hold  SSOI  and  Stewart  &
Stevenson  ("SSSI") harmless for all damages arising out of  the  negligent
acts   or   omissions   of   Newark  Group,  its   affiliates,   employees,
representatives, and contractors.

Furthermore  is  recognized  that SSOI will require  24  hour  unrestricted
access  to the auxiliary boiler and necessary connections on Newark Group's
property,  and NRG Newark agrees to immediately obtain all agreements  from
Newark  Group to ensure SSOI has such access.  SSOI will not be in  default
under  the NRG Newark O&M Agreement resulting from a lack of access to  the
auxiliary boiler and necessary connections.

If the auxiliary boiler package is owned by Newark Group then as an express
condition  to  SSOI's  performance  of its  obligation  under  this  letter
agreement,  NRG  Newark  shall  provide  or  obtain  from  Newark  Group  a
certificate  of  insurance naming SSOI and SSSI as  additional  insured  on
Newark Group's general liability, excess liability and boiler and machinery
insurance policies, each of which shall be in an amount no less than  those
required  under  the  NRG Newark O&M Agreement for  such  coverages.   Such
insurance  shall also include waivers of subrogation in favor of  SSOI  and
SSSI  and  shall not be canceled or modified except upon 30  days'  written
notice.

SSOI  agrees  to  furnish NRG Newark a spare parts list for  the  auxiliary
boiler  to  allow operation consistent with good industry  practice.   Such
costs for procurement will be regarded as initial inventory and will be  to
the  NRG Newark's account and will not affect SSOI's budget caps as defined
in the NRG Newark O&M Agreement.

NRG  Newark  agrees  to  provide or to cause Newark Group  to  provide  all
permits pertinent to the operation and maintenance of the auxiliary  boiler
for  SSOI's  review  no  less than 10 business  days  prior  to  commercial
operation  of  the  auxiliary boiler, regardless of eventual  ownership  of
auxiliary boiler.

NRG  Newark  recognizes that the auxiliary boiler will be in  an  unsecured
environment not with SSOI's control.  SSOI shall have no responsibility for
security  for  the auxiliary boiler and NRG Newark releases SSOI  from  any
liability  for  damage to the auxiliary boiler except to  the  extent  such
damage results from the negligent operation and maintenance thereof.


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NRG  Newark  acknowledges that the auxiliary boiler will be located  in  an
area  at  the Newark Group facility which may contain unknown environmental
concerns  over  which SSOI has not control and NRG Newark shall  be  solely
responsible for ensuring such areas in full compliance with all  applicable
laws, permits, and regulations.

SSOI shall not be responsible or liable for, and it shall not constitute an
event  of default under the NRG Newark O&M Agreement, the failure  of  such
area  on  the  auxiliary  boiler  to  comply  with  such  applicable  laws,
regulations and permits.

This  letter  is  intended  as a clarifying amendment  to  the  NRG  Newark
Agreement.   Accordingly, the NRG Newark Agreement  is  hereby  amended  to
reflect  the  terms  hereof and, except as explicitly stated  above,  shall
continue  in  full  force  and effect in accordance  with  its  provisions.
Additionally, the provisions of Article XIX of the NRG Newark Agreement are
hereby  incorporated  into this letter as if they  were  separately  stated
herein.

If this letter accurately sets forth the terms of our understanding, please
so  indicated  by  executing a copy of this letter in  the  space  provided
below.



Yours very truly,

NRG GENERATING (NEWARK) COGENERATION

By: /s/   Leonard Bluhm
   Name:  Leonard A. Bluhm
   Title: President


ACKNOWLEDGED AND AGREED TO:

STEWART & STEVENSON OPERATIONS, INC.

By: /s/   Harvey A. Braswell
   Name:  Harvey A. Braswell
   Title: Vice President