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For Sale: Used Nuclear Reactor

Anybody want to buy a nuclear reactor? Surprisingly, some people do, at a bargain price, undeterred even by a neighbor with a troubled history.

An eager buyer is snapping up Three Mile Island's healthy reactor, in the first sale in U.S. history of an entire nuclear power plant.

The reactor, still churning out electricity, sits next to the shell of its twin, Three Mile Island's No. 2 reactor, and the site of the country's worst nuclear power accident.

The deal marks a dramatic shift in the industry as it faces its biggest challenge since that accident 20 years ago this month: how to survive with high-priced nuclear reactors against coal and modern natural gas plants in the competitive electricity market.

GPU Inc. of Morristown, N.J., is selling the plant to AmerGen, a partnership of Philadelphia-based PECO Energy Co. and British Energy. Analysts are watching this deal, as well as others to follow, to see if they are profitable.

The Entergy Corp., based in New Orleans, is expected soon to complete the purchase of the Pilgrim plant in Plymouth, Mass., from Boston Edison. Like GPU, Boston Edison is getting out of the electricity generation business, and Entergy is pushing to become "a national nuclear company."

Dozens of utilities, most with just a single nuclear plant, are looking to sell while others are leaving the electricity generation business to concentrate on power distribution.

Seeking to buy are industry executives convinced they can get a bargain and make money by operating reactors for the next few decades.

"In general you're able to buy nuclear for next to nothing ...and that could bring a renaissance" to the industry, says Robert Rubin, an analyst for Bear Stearns & Co.

Companies such as Amergen, Entergy, and Duke Energy in Charlotte, N.C., think that by consolidating and becoming "national nuclear companies" they can operate many of these plants profitably and safely.

Because reactor fuel is about a third cheaper than fossil fuels, nuclear plants compete in producing electricity, the industry argues.

In 1997 it cost 2 cents a kilowatt hour to produce electricity from some of the most efficient nuclear reactors. That is a bit more than from coal but below the overall average of 2.13 cents from all fossil fuel plants. The average cost for all nuclear plants was 2.48 cents, according to the federal Energy Information Administration.

AmerGen, the PECO joint venture, will get the TMI reactor for less than 20 cents on the dollar: $23 million plus another $77 million for the fuel already contracted. The seller will put up the money to pay for the eventual shutdown of the reactor, whose value on GPU's books is $600 million.