Nuclear Summer

Three Mile Island. Chernobyl. And don't forget The China Syndrome. With their long, notorious track records of burning money and spewing toxic waste, it's hard to imagine that nuclear power plants could ever again be hot properties. But in Vernon, Vt., some of the nation's largest energy companies are battling to gobble one up. The Vermont Yankee plant, a 28-year-old nuclear war-horse, has become the target of a bidding war.

With the price of oil and natural gas escalating, concerns about global warming rising and electricity markets deregulating, these onetime white elephants are starting to look more like cash cows. The Vermont battle, in fact, is just the latest stop on an industrywide shopping spree that is fueling a nuclear resurgence. By the end of the decade, new nuclear power plants could be sprouting up right here at home: the Nuclear Regulatory Commission (NRC) has already approved the next generation of supposedly cheaper, safer plant designs.

While California braces for a summer of rolling blackouts and New York City prays that the lights stay on, Washington is helping ignite a fire under nuclear power. As part of the hotly debated national energy plan that he unveiled last week, President George Bush called nuclear energy "a major component" of any solution. Critics, not surprisingly, say the comeback of the $43 billion-a-year industry is a step in the wrong direction that will threaten the environment as well as public health and safety. Nor did the Administration's unexpected recommendation to take another look at reprocessing spent nuclear fuel get a particularly warm reaction.

Over the past few years, the nuclear industry's top players, led by Entergy and Exelon (formed by the merger of Philadelphia-based PECO Energy and Chicago native Unicom), have shelled out nearly $4 billion to purchase 15 of the nation's 103 operating plants--including such unlikely prizes as the surviving sister unit of Pennsylvania's infamous Three Mile Island No. 2 reactor. These new nuclear powers, which also include Duke Energy, Southern Co., Dominion Resources and Constellation Energy, have reversed years of mismanagement and cost overruns to turn the plants into the reliable, profitable atomic engines they were meant to be.

Their secret? They're better operators than the former owners, publicly owned utilities, and they can use economies of scale to their advantage. Despite the fact that no new plants have been ordered in almost a quarter-century, the nuclear power sector still accounts for 20% of the nation's electricity supply. During the past decade, output has increased 25%, equivalent to building 23 new 1,000-megawatt plants. And the beat will go on: the initial 40-year licenses of a small but growing number of units are being renewed for an additional two decades.

As for new plants, Exelon is already working on the next generation, exemplified by a helium-cooled, pebble-bed test reactor it is helping build in South Africa that, theoretically at least, wouldn't ever need to be shut down for refueling and is practically meltdown-proof. Of course, the company would still have to find a place in the U.S. to put it. Many homeowners would sooner burn coal in their own fireplace than live next to a reactor. So rather than try to find converts, the industry hopes to construct new facilities on existing sites, in communities that already depend on plants for jobs.