<PAGE>

Exhibit 10.3

                               AGREEMENT OF EMPLOYMENT

     THIS AGREEMENT is entered into as of the 1st day of May, 1999 by and 
between Cogeneration Corporation of America ("Company"), a Delaware 
corporation, and Julie A. Jorgensen ("Employee").

WHEREAS:

A.   Company desires to employ Employee, and Employee desires to be employed 
by Company, as Company's "President and Chief Executive Officer."

B.   Employee and Company recognize and acknowledge that Employee's executive 
responsibilities will give Employee knowledge of all aspects of the Company's 
operations, including its business plans and strategies, current and 
contemplated generation projects and ventures, customers, and other 
proprietary information, which information would seriously harm Company if 
provided to a competitor.  In addition, Employee's responsibilities will 
allow Employee to develop business relationships with existing and potential 
customers, suppliers and partners and with other Company employees that, if 
used on behalf of a competitor, would seriously harm Company.

C.   Employee and Company recognize and acknowledge Company's need to protect 
its confidential and proprietary information as well as its business 
relationships and goodwill.

NOW, THEREFORE, in consideration of the mutual promises contained in this 
Agreement, Employee and Company, intending to be legally bound, agree as 
follows:

     1.   EMPLOYMENT.

          (a)  POSITION AND DUTIES.  Company agrees to employ Employee as its
     "President and Chief Executive Officer," with such duties as may be
     determined by Company from time to time.  Employee shall perform these
     duties subject to the direction and supervision of Company's Board of
     Directors.  Employee accepts such employment and agrees to devote her full
     time skills to the conduct of Company's business, performing to the best of
     Employee's abilities such duties as may be reasonably requested by Company.
     Employee agrees to serve Company diligently and faithfully so as to advance
     Company's best interests and agrees to not take any action in conflict with
     Company's interests.

          (b)  TERM.   This Agreement shall be effective May 1, 1999 and shall
     continue for an initial term ending on the second anniversary of the
     effective date.  Thereafter, the term shall be automatically extended for
     successive one year periods unless either party gives written notice to the
     other in advance of any annual anniversary date of this 

<PAGE>

     Agreement (beginning May 1, 2000) that the term shall expire one year from 
     such annual anniversary date.

          (c)  TERMINATION.  This Agreement may be terminated by either Company
     or Employee upon 30 days advance written notice.  In addition, this
     Agreement shall immediately terminate upon Employee's death or Disability
     (as defined below).  If Employee's employment is terminated due to
     Employee's death or Disability or for Cause (as defined below) or if
     Employee voluntarily resigns without Good Cause (as defined below), Company
     shall pay Employee's Base Salary (as defined below) and employee benefits
     (which shall not include any incentives such as stock option grants or
     annual or other bonuses which were not earned in full as of the date of
     termination or resignation) through the date of termination or resignation
     and Company shall have no further obligations under this Agreement.  If
     Company terminates Employee's employment for any reason other than death,
     Disability or Cause, or if Employee voluntarily resigns for Good Cause,
     Company shall pay Employee a lump sum, as severance (the "Severance
     Payment"), calculated as set forth below provided that Employee executes a
     settlement and release agreement in a form acceptable to Company releasing
     Company from any and all claims which Employee may have against Company,
     whether relating to Employee's employment, termination or otherwise.  The
     Severance Payment shall be equal to two times the sum of Employee's then
     current Base Salary plus an amount equal to the target amount for
     Employee's annual bonus as provided in the Company's Short Term Incentive
     Plan in effect on the date of Employee's termination or resignation;
     provided, however, that if there has been a "Change in Control" (as such
     term is defined in the Company's 1997 Stock Option Plan (the "1997 Plan"),
     a copy of which is attached as Exhibit A) of the Company and the effective
     date of such termination or resignation is on or before May 1, 2000, the
     Severance Payment shall be equal to the sum of Employee's then current Base
     Salary plus an amount equal to the target amount for Employee's annual
     bonus as provided in the Company's Short Term Incentive Plan in effect on
     the date of Employee's termination or resignation.  For purposes of this
     Agreement, (i) "Cause" means willful neglect or failure to render services
     to be performed under this Agreement (not including any failure resulting
     from any of the circumstances covered within the definition of
     "Disability") or engaging in illegal conduct or gross misconduct either of
     which results in material and demonstrable damage to the business of
     Company, (ii) "Disability" means the date upon which Employee is qualified
     to receive long term disability benefits under the Company's long term
     disability policy or, if no such policy exists, the date upon which
     Employee shall have been unable, due to illness, accident or any other
     physical or mental incapacity, to perform her duties under this Agreement
     for a period of six consecutive months and (iii) resign with "Good Cause"
     means resigning (A) within three months of a material change or reduction
     in Employee's title or job responsibilities with Company, unless such
     action is remedied by Company promptly upon receipt of written notice
     thereof from Employee, (B) within three months of a change of the Company's
     headquarters to a location which is more than 25 miles from its current
     location at 1 Carlson Parkway, Minnetonka, MN or (C) as a result of a
     material breach by Company of the compensation or benefit terms of this
     Agreement, provided that Employee has given Company written notice of, and
     a reasonable opportunity to cure, such breach. 

<PAGE>

     (d)  COMPENSATION AND BENEFITS.

          (I)   BASE SALARY.  Company shall pay Employee an annual base salary
                ("Base Salary") of $200,000, payable in 24 equal bi-monthly
                installments on the Company's regular payroll dates.  The Base
                Salary shall be subject to review and adjustment by the Board of
                Directors as of May of each year but shall not be less than the
                Base Salary initially in effect on the date of this Agreement.

          (II)  ONE-TIME BONUS.  Upon execution of this Agreement, Company shall
                pay Employee a one-time signing bonus of $20,000.  If Employee
                resigns her employment with Company for any reason other than
                Good Cause or if Employee's employment with Company is
                terminated for Cause on or before May 1, 2000, Employee shall be
                obligated to refund to Company all amounts paid to Employee
                under this subparagraph (II);

          (III) ANNUAL BONUS PROGRAM.  Employee will be eligible to participate
                in the Company's Short-Term Incentive Plan which provides for
                annual bonuses based on the performance of Employee and Company.
                The guidelines used to determine awards under the Company's
                existing Short-Term Incentive Plan are set forth on Exhibit B.

          (IV)  OTHER BENEFITS.  Employee shall be entitled to fully paid
                parking (if necessary), 4 weeks of paid vacation annually and a
                leased automobile pursuant to the Company's program administered
                by GE Credit (which is the same as the program in place for
                officers of NRG Energy, Inc.).  In addition, Company shall
                provide such medical and other benefits as are approved by
                Company's Board of Directors for the benefit of all Company
                executives; provided, however, that the benefits provided by
                Company to its executives (including Employee) and other
                employees are subject to change from time to time at the
                discretion of Company with or without prior notice.  Finally,
                Employee acknowledges that Company does not currently have, and
                it is not contemplated that Company will have, a defined benefit
                pension plan.

          (V)   CLUB MEMBERSHIP.  Employee shall be entitled to reimbursement
                for monthly membership dues (but not initiation fees or dues),
                up to a maximum of $450 per month (subject to upward adjustment
                by the Board of Directors), at a club of her choice located near
                the Company's headquarters.

          (VI)  STOCK OPTIONS.  Employee shall be entitled to receive
                performance based incentive stock options (the "Options") to
                purchase 233,000 

<PAGE>

                shares of Company common stock under the 1997 Plan and 17,000 
                shares of Company common stock under the Company's 1998 Stock 
                Option Plan (the "1998 Plan"), a copy of which is attached as 
                Exhibit C.  The exercise price of the Options shall be equal 
                to the closing price of Company common stock on the date the 
                Options are granted, and the Options shall vest as follows:

                a)  50,000 shares under the 1997 Plan (the "First Block") when
                    either (i) the price of Company common stock is greater than
                    or equal to $15 per share for at least 15 of 20 consecutive
                    trading days or (ii) a "Corporate Transaction" shall be
                    deemed to occur under the 1997 Plan which will result in at
                    least $15 per share in cash (or an equivalent amount in
                    other consideration) to be paid to the holders of Company
                    common stock, provided that if the First Block has not
                    vested on or before December 31, 2004 it shall expire;

                b)  50,000 shares under the 1997 Plan (the "Second Block") when
                    either (i) the price of Company common stock is greater than
                    or equal to $20 per share for at least 15 of 20 consecutive
                    trading days or (ii) a "Corporate Transaction" shall be
                    deemed to occur under the 1997 Plan which will result in at
                    least $20 per share (or an equivalent amount in other
                    consideration) to be paid to the holders of Company common
                    stock, provided that if the Second Block has not vested on
                    or before December 31, 2004 it shall expire;

                c)  100,000 shares under the 1997 Plan (the "Third Block") when
                    either (i) the price of Company common stock is greater than
                    or equal to $25 per share for at least 15 of 20 consecutive
                    trading days or (ii) a "Corporate Transaction" shall be
                    deemed to occur under the 1997 Plan which will result in at
                    least $25 per share (or an equivalent amount in other
                    consideration) to be paid to the holders of Company common
                    stock, provided that if the Third Block has not vested on or
                    before December 31, 2006 it shall expire;

                d)  33,000 shares under the 1997 Plan (the "Fourth Block") when
                    either (i) the price of Company common stock is greater than
                    or equal to $35 per share for at least 15 of 20 consecutive
                    trading days or (ii) a "Corporate Transaction" shall be
                    deemed to occur under the 1997 Plan which will result in at
                    least $35 per share (or an equivalent amount in other
                    consideration) to be paid to the holders of Company common
                    stock, provided that if the Fourth Block has not vested on
                    or before December 31, 

<PAGE>

                    2006 it shall expire; and

                e)  17,000 shares under the 1998 Plan (the "Fifth Block") when
                    either (i) the price of Company common stock is greater than
                    or equal to $35 per share for at least 15 of 20 consecutive
                    trading days or (ii) a "Corporate Transaction" shall be
                    deemed to occur under the 1998 Plan which will result in at
                    least $35 per share (or an equivalent amount in other
                    consideration) to be paid to the holders of Company common
                    stock, provided that if the Fifth Block has not vested on or
                    before December 31, 2006 it shall expire.

                Except as specifically provided above, none of the Options shall
                vest or otherwise become exercisable upon a "Change in Control"
                or "Corporate Transaction" (as such terms are defined in the
                applicable Stock Option Plan).  If any of the Options vest in
                accordance with their terms, such Options shall remain
                exercisable until ten years from the date of grant.

          (VII) TRANSACTION BONUS.  If Employee's employment is terminated by
                Company without Cause on or before May 1, 2001 and if within six
                months of the effective date of such termination a Corporate
                Transaction shall be deemed to occur under the applicable Stock
                Option Plan, then Company shall pay to Employee a bonus equal to
                the number of shares of Company common stock covered by
                Qualifying Options (as defined below) multiplied by the
                difference (calculated for each Qualifying Option) between the
                value of the consideration paid per share in the Corporate
                Transaction to holders of Company common stock and the exercise
                price per share of any Options which were not vested as of the
                effective date of such termination but which would have vested
                had Employee been employed by Company on the date the Corporate
                Transaction is deemed to occur ("Qualifying Options").  If the
                consideration paid in the Corporate Transaction is stock or
                other securities which would have allowed Employee to be
                eligible for long-term capital gains treatment with respect to
                any gain to be recognized on the disposition of the stock or
                other securities received, the amount calculated in the
                preceding sentence shall be increased by 50%.

     2.   NON-COMPETITION.

          (a)  Employee understands and agrees that, in addition to 
     Employee's below-described exposure to Company's Confidential 
     Information or Trade Secrets, Employee may, in his or her capacity as an 
     employee, at times meet with Company's customers and 

<PAGE>

     suppliers, and that as a consequence of using and associating with 
     Company's name, goodwill, and professional reputation, Employee will be 
     in a position to develop personal and professional relationships with 
     Company's past, current, and prospective customers and suppliers.  
     Employee further acknowledges that during the course and as a result of 
     employment by Company, Employee may be provided certain specialized 
     training or know-how.  Employee understands and agrees that this 
     goodwill and reputation, as well as Employee's knowledge of Confidential 
     Information or Trade Secrets and specialized training and know-how, 
     could be used unfairly in competition against Company.

          (b)   Accordingly, Employee agrees that, during the course of
     Employee's employment with Company and for one year from the date of
     Employee's voluntary or involuntary resignation from, or termination of
     employment with, Company, Employee shall not:

                (i)      Directly or indirectly own, manage, consult, associate
          with, operate, join, work for, control or participate in the
          ownership, management, operation or control of, or be connected in any
          manner with, any business (whether in corporate, proprietorship, or
          partnership form or otherwise), as more than a 10% owner in such
          business or member of a group controlling such business, which is
          engaged in the development, ownership or operation of cogeneration
          energy facilities or which will compete with any proposed business
          activity of Company in the planning stage on the date of her
          resignation or termination.  Employee and Company agree that this
          provision is reasonably enforced as to the United States.

                (ii)     Directly or indirectly solicit, service, contract with
          or otherwise engage any past (one year prior) or existing customer,
          client, or account who then has a relationship with Company for
          current or prospective business on behalf of a competitor of the
          Company, or on Employee's own behalf for a competing business. 
          Employee and Company agree that this provision is reasonably enforced
          as to the United States.

                (iii)    Cause or attempt to cause any existing customer,
          client, or account, who then has a relationship with the Company for
          current or prospective business, to divert, terminate, limit or in any
          manner modify, or fail to enter into any actual or potential business
          relationship with Company.  Employee and Company agree that this
          provision is reasonably enforced as to the United States.

                (iv)     Directly or indirectly solicit, employ or conspire with
          others to employ any of Company's employees.  The term "employ" for
          purposes of this paragraph means to enter into an arrangement for
          services as a full-time or part-time employee, independent contractor,
          consultant, agent or otherwise.  Employee and Company agree that this
          provision is reasonably enforced as to the United States.

          (c)   Employee further agrees to inform any new employer or other
     person or entity with whom Employee enters into a business relationship
     during the one year non-

<PAGE>

     competition period, before accepting such employment or entering into 
     such a business relationship, of the existence of this Agreement and 
     give such employer, person or other entity a copy of this paragraph 2.

          (d)   Company agrees that the terms "activity which will compete with
     the business of the Company," "competitor of the Company," "competing
     business," and "relationship with the Company" as used in this Agreement
     shall be narrowly applied and that it is not the belief of Company that all
     companies in the energy business are competitors of Company.  Company
     further agrees that this Agreement shall not be so broadly construed that
     Employee is prevented during the non-compete period from obtaining all
     other employment in the energy industry.

     3.   RETURN OF PROPERTY.  Employee agrees that upon the termination of 
employment with Company the originals and all copies of any and all documents 
(including computer data, disks, programs, or printouts) that contain any 
customer information, financial information, product information, or other 
information that in any way relates to Company, its products or services, its 
clients, its suppliers, or other aspects of its business shall be immediately 
returned to Company.  Employee further agrees to not retain any summary of 
such information.

     4.   CONFIDENTIAL INFORMATION/TRADE SECRETS.

          (a)   Employee acknowledges that during the course and as a result of
     his or her employment, Employee may receive or otherwise have access to, or
     contribute to the production of, Confidential Information or Trade Secrets.
     "Confidential Information" or "Trade Secrets" means information that is
     proprietary to or in the unique knowledge of Company (including information
     discovered or developed in whole or in part by Employee); the Company's
     business methods and practices; or information that derives independent
     economic value, actual or potential, from not being generally known to, and
     not being readily ascertainable by proper means by, other persons who can
     obtain economic value from its disclosure or use, and is the subject of
     efforts that are reasonable under the circumstances to maintain its
     secrecy. It includes, among other things, strategies, procedures, manuals,
     confidential reports, lists of clients, customers, suppliers, past, current
     or possible future products or services, and information concerning
     research, development, accounting, marketing, selling or leases and the
     prices or charges paid by the Company's customers to the Company, or by the
     Company to its suppliers.

          (b)   Employee further acknowledges and appreciates that any
     Confidential Information or Trade Secret constitutes a valuable asset of
     Company and that Company intends any such information to remain secret and
     confidential.  Employee therefore specifically agrees that except to the
     extent required by Employee's duties to Company or as permitted by the
     express written consent of the Board of Directors, Employee shall never,
     either during employment with Company or at any time thereafter, directly
     or indirectly use, discuss or disclose any Confidential Information or
     Trade Secrets of Company or otherwise use such information to his or her
     own or a third party's benefit.

<PAGE>

     5.   CONSIDERATION.  Employee and Company agree that the provisions of 
this Agreement are reasonable and necessary for the protection of Company and 
its business.  In exchange for Employee's agreement to be bound by the terms 
of this Agreement, Company has provided Employee the consideration provided 
in paragraph 1.  Employee accepts and acknowledges the adequacy of such 
consideration for this Agreement.

     6.   REMEDIES FOR BREACH.  Employee and Company acknowledge that a 
breach of the provisions of this Agreement may cause irreparable harm that 
may not be fully remedied by monetary damages.  Accordingly, Employee and 
Company shall, in addition to any relief afforded by law, be entitled to 
injunctive or other equitable relief from the other for breach.  Employee and 
Company agree that both damages at law and injunctive or other equitable 
relief shall be proper modes of relief and are not to be considered 
alternative remedies.

     7.   EMPLOYEE'S ACKNOWLEDGEMENT OF REVIEW.  Employee represents that 
Employee has carefully read and fully understands all provisions of this 
Agreement and that Employee has had a full opportunity to review this 
Agreement before signing and to have all the terms of this Agreement 
explained to her by counsel.

     8.   GENERAL PROVISIONS.  Employee and Company acknowledge and agree as 
follows:

          (a)   This Agreement contains the entire understanding of the parties
     with regard to all matters contained herein.  There are no other
     agreements, conditions, or representations, oral or written, express or
     implied, with regard to such matters.  This Agreement supersedes and
     replaces any prior agreement between the parties generally relating to the
     same subject matter.

          (b)   This Agreement may be amended or modified only by a writing
     signed by both parties.

          (c)   Waiver by either Company or Employee of a breach of any
     provision, term or condition hereof shall not be deemed or construed as a
     further or continuing waiver thereof or a waiver of any breach of any other
     provision, term or condition of this Agreement.

          (d)   This Agreement shall inure to the benefit of and be binding upon
     Company and its successors and assigns.  Company shall require any
     successor (whether direct or indirect, by asset or stock purchase, merger,
     consolidation or otherwise) to all or substantially all of the business
     and/or assets of Company expressly to assume and agree to perform this
     Agreement in the same manner and to the same extent that Company would have
     been required to perform it if no such succession had taken place.  As used
     in this Agreement, "Company" shall mean include any such successor that
     assumes and agrees to 

<PAGE>

     perform this Agreement, by operation of law or otherwise.  No assignment 
     of this Agreement shall be made by Employee, and any purported 
     assignment shall be null and void.

          (e)   No provision of this Agreement shall be construed as denying
     Company or Employee the right to terminate this Agreement consistent with
     the terms hereof.

          (f)   Employee's obligations under paragraphs 2, 3, and 4 of this
     Agreement and Company's obligations under paragraph 1(c) and (d) shall
     survive any changes in Employee's employment status with Company, by
     promotion or otherwise, or Employee's resignation from, or termination of
     employment with, Company.

          (g)   If any court finds any provision or part of this Agreement to be
     unreasonable, in whole or in part, such provision shall be deemed and
     construed to be reduced to the maximum duration, scope or subject matter
     allowable under applicable law.  Any invalidation of any provision or part
     of this Agreement will not invalidate any other provision or part of this
     Agreement.

          (h)   This Agreement will be construed and enforced in accordance with
     the laws and legal principles of the State of Minnesota.  The Employee
     consents to the jurisdiction of the Minnesota courts for the enforcement of
     this Agreement. 

          (i)   This Agreement may be executed in one or more counterparts, each
     of which shall be deemed to be an original, but all of which together will
     constitute one and the same instrument.


     9.   ARBITRATION.   Any claim, controversy or dispute arising between 
the parties under this Agreement ("Dispute"), to the maximum extent allowed 
by law, shall be submitted to and finally resolved by, binding arbitration.  
Any party may file a written demand for arbitration with the American 
Arbitration Association, and shall send a copy of the demand for arbitration 
to the other party.  The arbitration shall be conducted pursuant to the then 
current terms of the Federal Arbitration Act and the Rules of the American 
Arbitration Association.  To the extent such rules are not inconsistent with 
the terms and conditions of this paragraph 9, the venue for the arbitration 
shall be Minneapolis, Minnesota.  The arbitration shall be conducted before 
one arbitrator selected as follows:  within ten business days after the 
filing of the demand for arbitration, each party shall designate a 
representative and, within ten business days after the end of such ten day 
period, such representatives shall select an arbitrator who will serve as the 
sole arbitrator of the Dispute.  If the representatives of the parties are in 
good faith unable to agree upon an arbitrator during the latter ten day 
period, the arbitrator shall be selected through the American Arbitration 
Association's arbitrator selection procedures.  The arbitrator shall promptly 
fix the time, date and place of the hearing and notify the parties 
accordingly.  The arbitration shall be held and the decision of the 
arbitrator shall be provided as quickly as is reasonably possible and the 
arbitrator's decision may include an award of legal fees, costs of 
arbitration and interest.  The arbitrator shall promptly transmit an executed 
copy of its decision to the parties, stating the reasons for the decision.  
The decision of the arbitrator shall be final, binding and conclusive upon 
the parties.  Each Party shall 

<PAGE>

have the right to have the decision enforced by any court of competent 
jurisdiction.  Notwithstanding any other provision of this paragraph 9, any 
dispute in which a party seeks equitable relief may be brought in any court 
having competent jurisdiction.


THIS AGREEMENT IS INTENDED TO BE A LEGALLY BINDING DOCUMENT FULLY ENFORCEABLE 
IN ACCORDANCE WITH ITS TERMS.  IF IN DOUBT, SEEK COMPETENT LEGAL ADVICE 
BEFORE SIGNING.




-------------------------------------------    -------------------------
                (Employee)                              Date



COGENERATION CORPORATION OF AMERICA



By
   ----------------------------------------    -------------------------
      Its Chairman of the Board                         Date



Employee acknowledges that she has received a copy of this Agreement.