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[NRG Generating (U.S.) Inc. letterhead]


March 28, 1997



Mr. Robert T. Sherman, Jr.
4511 Verone Street
Bellaire, Texas 77401

Dear Bob:

Subject:  Employment Offer/Agreement

I am pleased to provide an offer of employment to you for the position
of President & CEO of NRG Generating (U.S.) Inc. ("NRGG").  The
elements of the employment offer for your consideration are summarized
below:

1.   Employment will commence upon a mutually agreed start date of no
     later than May 1, 1997 (the "Start Date").

2.   Base salary will be $210,000 per year ("Base Salary").

3.   A signing bonus of $40,000 will be paid within seven (7) business
     days of the Start Date.

4.   The "1997 Short-Term Incentive Plan Specifications" is attached as
     Exhibit "A". While the goals outlined in that plan will help guide
     expectations during 1997, the Company is agreeing that your 1997
     incentive will be calculated at the maximum level of 60 percent of
     Base Salary assuming you arc employed from the Start Date through
     December 31, 1997.

5.   You will be granted an option for 105,000 shares ("Base Option")
     of NRGG stock pursuant to a new stock option plan.  The new option
     plan will be identical to the existing 1996 Stock Option Plan of
     NRGG except that the definition of Change of Control will include
     either an acquisition by NRG Energy, Inc. of more than 51% of the
     capital stock of NRGG or a merger of NRGG into NRG Energy, Inc.
     The Date of Grant will be the Start Date.  Pursuant to the plan,
     the option price will be equal to the average of the 20-trading
     days closing price prior to the Start Date. Your option grant
     agreements (Base and Performance) will be drafted to provide that
     these options are Incentive Stock Options (ISO) to the greatest
     extent allowed by law and the Internal Revenue Service's
     regulations.  One-third of the Base Option grant will vest and be
     exercisable on each of the first three anniversaries of the Date
     of Grant.  The Base Option grant will have a term of ten years.

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Mr. Robert T. Sherman, Jr.
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March 28, 1997

     It is understood that this Base Option grant is subject to
     ratification of the new stock option plan and of these options by
     the Shareholders of NRGG, and that the option contract itself will
     not be entered into, delivered or binding until after such
     ratification.

6.   Within the new stock option plan as described above (item #5) you
     will also be granted a performance based stock option for 100,000
     shares ("Performance Option") of NRGG stock on the Start Date  The
     option price will be equal to the average of the 20-trading days
     closing price prior to the Start Date.  It is understood that this
     Performance Option grant is subject to ratification of the new
     stock option plan and these options by the Shareholders of NRGG
     and that the option contract itself will not be entered into,
     delivered or binding until after such ratification. These shares
     would vest as follows:

     a)   50,000 shares (the "First Block") when the NRGG common stock
          price is greater than or equal to $25 per share for 20
          consecutive days.  The right to achieve the vesting of the
          First Block will be valid through December 31, 1999.  If the
          First Block becomes vested, it will be exercisable until the
          tenth anniversary of the Grant Date.

     b)   50,000 shares (the "Second Block") when the NRGG common stock
          price is greater than or equal to $35 per share for 20
          consecutive days.  The right to achieve the vesting of the
          Second Block will be valid through December 31, 2001. If the
          Second Block becomes vested, it will be exercisable until the
          tenth anniversary of the Grant Date.

7.   NRGG will provide employee health and welfare benefits under
     NRGG's existing plans as included as exhibits "B" and "C":

     a)   Major medical benefits pursuant to NRGG's Blue Cross plan;

     b)   Dental coverage per NRGG's plan;

     c)   Other comprehensive coverage and life insurance per NRGG's
          plan.

     The cost to the employee of NRGG's health and we1fare plans (a, b
     & c) for 1997 is $5.00 per month.

8.   You will be provided with the benefits of the NRGG relocation
     program (a plan purchased by NRGG from NRG/NSP as outlined
     earlier). See exhibit "D".

9.   You will be provided a leased automobile pursuant to the NRGG
     Officer level program (same program as NRG/NSP officer program)
     administered by GECC.  Since you would like to transfer your
     existing vehicle to the program, arrangement will be made for GECC

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Mr. Robert T. Sherman, Jr.
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March 28, 1997

     to purchase your vehicle at current market value from you (any
     associated loan payoffs will be your responsibility).  Normally,
     any purchase price above the program maximum (currently $27,000)
     must be paid by the employee.  On this occasion only, NRGG will
     reimburse the program for any amount over the program purchase
     price maximum of $27,000.

10.  Underground parking at 1221 Nicolett Mall will be paid by NRGG.

11.  Business club dues at a club of your choice (subject to prior
     approval by the Chairman) will be paid by NRGG.

12.  You will be entitled to vacation eligibility of 4 weeks per year.

13.  Your work location will be 1221 Nicollet Mall, Suite 610,
     Minneapolis, MN.

14.  NRGG shall consider you to be an employee at will and accordingly
     may terminate your employment with NRGG at any time, for any
     reason, with or without cause. Notwithstanding the previous
     sentence, NRGG will provide you with the following severance
     payment arrangement during the three-year period commencing on the
     Start Date and ending on the third anniversary of the Start Date
     (the "Severance Payment Period").  During the Severance Payment
     Period, if your employment with NRGG terminates, then NRGG will
     make severance payments to you if, and only if, a) you are
     terminated without Cause, or b) NRGG has materially breached a
     material obligation of NRGG under this agreement and you have
     therefore elected to terminate your employment with NRGG within 30
     days of such breach, or c) there has been a Change of Control or
     Corporate Transactions (as such terms are defined in NRGG's 1996
     Stock Option plan, as modified pursuant to the second sentence of
     item number 5 above) and you have therefore elected to terminate
     your employment with NRGG within 30 days of such Change of Control
     or Corporate Transaction.  The amount of any such severance
     payment will be that portion of your Base Salary remaining from
     the termination date to the third anniversary of the Start Date.
     For purposes of this item 14, "Cause" shall mean either of:

     (i)  the commission of a felony or gross negligence in the conduct
          of your duties at NRGG: or

     (ii) your engaging in conduct that is either outside of the
          ordinary scope of your duties at NRGG or a material breach of
          your obligations under this letter agreement and that has a
          material adverse effect on the business or financial
          condition of NRGG.

If NRGG determines that it has the right to terminate your employment
with NRGG for Cause add elects to exercise that right, then NRGG will
give you notice thereof.  Such notice shall

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Mr. Robert T. Sherman, Jr.
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March 28, 1997

describe in reasonable detail the conduct or circumstances that
constitute Cause.  If such notice is delivered under item ii, then you
will have a period of 30 days from the date of such notice within which
to cure the conduct or circumstances constituting Cause and to cause to
be repaired the adverse effect on the business or financial condition
of NRGG.  Termination of your employment with NRGG shall become
effective on the date of the notice if the notice is given under item i
or on the 30th day following the date of such notice if the notice is
given under item ii and the above referenced cure and repair has not
been completed to the reasonable satisfaction of NRGG within such 30
day period.

15.  In order to protect the Company's interest in the development and
     maintenance of business opportunities, you and we agree as
     follows:

     a)   You will at all times faithfully, industriously and to the
          best of your ability, experience, and talents, perform and
          discharge the duties of your position and that otherwise may
          be required of and from you by the Board of Directors of NRGG
          so as to promote the profit, benefit and business of NRGG and
          so as to represent NRGG in the most professional manner
          possible.  In the performance of your duties hereunder, you
          covenant that you will diligently and in a business-like
          manner, and to the best of your abilities, and consistent
          with your overall duties to the stockholders of NRGG: (a)
          keep, observe and perform all lawful rules, regulations and
          duties that may be adopted or prescribed by the Board of
          Directors of NRGG; and (b) perform such other functions as
          are appropriate to further the best interests of NRGG.

     b)   You shall devote your full business time, attention,
          knowledge, effort and skills solely to the business and
          interests of NRGG.  You shall not devote significant business
          time to activities that would inhibit or otherwise interfere
          with the proper performance of your duties and shall not be
          directly or indirectly concerned or interested in any other
          occupation or business; provided, however, that you shall be
          entitled to maintain investments and interests in
          corporations or business ventures provided that such
          investments or interests do not interfere with your ability
          to devote your full business time to NRGG and to perform your
          duties hereunder; provided, further however, that any
          investment that you have, make or acquire in a Competitor
          must be limited to a passive investment in less than 5% of
          the publicly traded securities of such Competitor.   You
          acknowledge and agree that all business opportunities
          presented to you in the scope of your employment relating to
          the business of NRGG shall belong to NRGG.   NRGG shall be
          entitled to all benefits, profits or other issues arising
          from or incident to all work, services and advice of you
          relating to the business of NRGG.  For purposes of this item
          number 15, "Competitor" shall refer to any person or entity
          engaged, wholly or partly, in the business of developing,
          financing, owning, operating or maintaining cogeneration or
          other electric power generation facilities or projects in the
          United

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Mr. Robert T. Sherman, Jr.
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March 28, 1997


          States of America.

     c)   To the greatest extent possible, any and all Work Product
          shall be deemed to be "work made for hire" (as defined in the
          Copyright Act, 17 U.S.C.A.   101 et seq., as amended) and
          owned exclusively by NRGG.  You hereby unconditionally and
          irrevocably transfer and assign to NRGG all right, title and
          interest you may have or acquire, by operation of law or
          otherwise; in or to any and all Work Product including,
          without limitation, all patents, copyrights, trademarks,
          service marks and other intellectual property rights. You
          agree to execute and deliver to NRGG any transfers,
          assignments, documents or other instruments which NRGG may
          deem necessary or appropriate to vest complete title and
          ownership of any and all Work Product, and all rights
          therein, exclusively in NRGG. "Work Product" shall mean all
          work product, property, data, documentation, "know how",
          concepts, plans, inventions, improvements, techniques,
          processes or information of any kind, prepared, conceived,
          discovered, developed or created by you in connection with
          the performance of your services hereunder.

     d)   You hereby covenant and agree that, if and when your
          employment with NRGG terminates, then during the one-year
          period following the date of such termination (the
          "Termination Date"), you will not, either directly or
          indirectly, alone or in conjunction with any other party,
          divert or appropriate, or attempt to divert or appropriate,
          any NRGG Project Opportunity.  An "NRGG Project Opportunity"
          means any and all of, but only, the following: (i) a project
          or opportunity to develop a project on which NRGG was
          actively working as of the Termination Date; (ii) a project
          or opportunity to develop a project on which NRG Energy, Inc.
          ("NRGE") was actively working as of the Termination Date with
          the intention of offering the same to NRGG at the appropriate
          time under the Co-Investment Agreement between NRGG and NRGE;
          and (iii) a project or project opportunity on which NRGE was
          actively working as of the Termination Date, which is not
          covered by item (ii) but as to which you have material
          knowledge.  NRGG will provide you with a list of projects
          meeting the above criteria promptly following the Termination
          Date.  You will have 30 days after your receipt of such list
          to notify NRGG of any projects or project opportunities
          included on the list that you do not believe meet the above
          criteria for NRGG Project Opportunity.  NRGG will consider
          your objections in good faith and then reissue the list of
          NRGG Project Opportunities, omitting any projects or project
          opportunities that NRGG agrees do not meet the above
          criteria.  The reissued list (or in the case of no objections
          within the above 30 day disagreement period, the original
          list) will be the final list of NRGG Project Opportunities.

     e)   You agree that damages at law for your violation of any of
          the covenants in this Section 15 would not be an adequate or
          proper remedy and that, should you

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Mr. Robert T. Sherman, Jr.
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March 28, 1997

          violate or threaten to violate any of the provisions of such
          covenants, NRGG or its successors or assigns shall be
          entitled to obtain a temporary or permanent injunction
          against you in any court having jurisdiction prohibiting any
          further violation of any such covenants, in addition to any
          award or damages (compensatory, exemplary or otherwise) for
          such violation.

     f)   NRGG has attempted to limit your rights under item 15d only
          to the extent necessary to protect NRGG from unfair
          competition.  You, however, agree that, if the scope of
          enforceability of any of these restrictive covenants is in
          any way disputed at any time, a court or other trier of fact
          may modify and enforce such covenant to the extent that it
          believes to be reasonable under the circumstances existing at
          the time.

16.  This employment offer is contingent upon your successful
completion of"

     a)   NRGG's pre-employment physical.

     b)   Drug screening and security background investigation.  (The
          security questionnaire previously transmitted to you needs to
          be conipteted and returned as soon as possible.)

     c)   Reference confirmations.

17.  If the Shareholders of NRGG reject the stock option plan
     contemplated in item numbers 5 and 6, then NRGG will issue to you
     stock options out of the existing 1996 Stock Option Plan that
     match as nearly as possible those contemplated in said items 5 and
     6; provided, however, that you understand that the total shares
     available for issuance under the 1996 Stock Option Plan is 176,000
     shares and that the 1996 Stock Option Plan's definition of Change
     of Control does not include an acquisition by NRG Energy, Inc. of
     stock of NRGG or a merger of NRGG into NRG Energy, Inc.

Your acceptance of this offer shall be subject to the conditions
specified in item 16.  The physical and drug screening will be
scheduled as soon as possible following your acceptance.  When the
conditions have been satisfied, the provisions of this letter will
function as the terms and conditions of a binding agreement between you
and NRGG.  NRGG will promptly notify you when the conditions specified
in item 16 have been fulfilled.

I am very pleased to be able to make this offer to you.  I am very
excited about the future of NRGG and I know that you share this
excitement as well.  Please call if you have any questions regarding
this employment offer.

Sincerely,

/s/ Leonard Bluhm

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Mr. Robert T. Sherman, Jr.
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March 28, 1997


                         Accepted:

                         /s/ Robert T. Sherman, Jr.

                         Date:  3/31/97