(FORTUNE Magazine) – NUCLEAR POWER was not a wonderful business to be in even before the disaster at Chernobyl. It now figures to become a lot less wonderful for utilities. Several companies that build and service nuclear plants also have a lot at stake; Westinghouse Electric, for example, may get as much as one-third of its profits from the business. But the effect of Chernobyl on these companies is not yet clear. Conceivably, some might benefit from it. For the industry as a whole, a lot is riding on the still evolving perceptions of regulators, investors, and consumers. If they see the disaster as an isolated event traceable to flawed designs and sloppy management in the Soviet Union, then even the utilities may not be hurt too much. That's one reason fierce arguments are now raging about power plant design. American utilities have been insisting, for example, that their reactors differ radically from the one that burned. The chief difference, they say, is that their commercial reactors contain no graphite -- this being the flammable material at Chernobyl. More important, their reactors are housed in so-called containment structures: thick concrete domes designed to keep radioactivity from spreading into the air in an accident. Beleaguered utility spokesmen around the world have done their best to make containment structures sound impregnable. For example, Commonwealth Edison, an industry leader whose nuclear plants help power the city of Chicago, was recently boasting to concerned callers that its reactors are sturdy enough to withstand the crash of a jetliner. Certainly the Chernobyl power plant, with its graphite core, is a lot different from the pressurized-water and boiling-water reactors used almost universally in the West. And yet there are also similarities, some noted by David Ward, chairman of the Advisory Committee on Reactor Safeguards, a committee formed by Congress to advise the Nuclear Regulatory Commission. ''Different types of power reactors,'' Ward says, ''have some common characteristics in their coolant systems, their instruments, and the way they behave when they begin to overheat.'' Moreover, it is unclear how the containment structures in some U.S. plants would hold up in a serious accident. They vary in design, and their ability to handle severe mishaps is a subject of a long-running argument. Says Norman * Rasmussen, a professor of nuclear engineering at MIT: ''The engineering community can estimate reasonably well what pressure containment structures can withstand. There are limits to the uncertainty.'' But the Advisory Committee on Reactor Safeguards questions whether enough really is known about the protection that some containment structures would afford in grave mishaps. In any event, Commonwealth Edison's boast about the air crash shouldn't be taken too seriously: the impact of a jetliner isn't comparable to the immense pressure buildup that could result from the severest possible nuclear accident. The NRC's judgments about the risks associated with meltdowns are less soothing than one might have hoped. In testimony before Congress last year the commission said that in most instances the containment structures would prevent radiation from seeping out and creating health hazards. However, the NRC officials rated the chance of a meltdown fairly high: their best guess was a 45% probability that one would occur at a U.S. nuclear plant within the next 20 years. So it is easy to see why the nuclear business was not too wonderful even before Chernobyl. The U.S. now has 101 nuclear plants in operation, with another two dozen or so on the way. However, the last order for a nuclear power plant was placed in 1978. Since then, 30 full-fledged American nuclear power stations have started operating but 66 others have been canceled. Just two months ago China put off plans to buy nuclear plants from Western manufacturers. In an effort to conserve foreign exchange, it will instead build hydroelectric plants. France, the world's second-largest producer of nuclear power (after the U.S. and just ahead of the Soviet Union) is awash in excess generating capacity: the country is exporting electricity to its neighbors, and since the late l970s demand for new French plants has shrunk from six per year to one. Shoja Etemad, formerly a nuclear safety engineer with Framatome, the giant French reactor builder, says the Chernobyl accident won't have much effect in France. His explanation: ''Framatome had no future before the accident.'' Things are scarcely better for West Germany's Kraftwerk Union, a sizable Siemens subsidiary. Orders in the Federal Republic have dried up, and the company is surviving on maintenance contracts and some business from Brazil. Political ripples from the Soviet disaster seem likely to slow down nuclear programs in England, the Netherlands, and Taiwan. The biggest U.S. manufacturer of reactors is Westinghouse Electric, which now relies heavily for new nuclear business on customers outside the U.S. James Moore, the company's vice president of power systems, says Chernobyl won't affect its overseas business. ''It will be just like Three Mile Island,'' he predicts. ''Our international customers looked at Three Mile Island and decided it wasn't signficant. This will be the same.'' But Moore may be too optimistic: two countries whose orders Westinghouse is wooing, Taiwan and the Netherlands, have shown signs of balking. If too many prospects get cold feet, Westinghouse could end up in bad shape; it is more dependent on nuclear business than its major competitors. General Electric, second among the U.S. reactor builders, hasn't sold a plant since 1975, and its commitment to the business is substantially lower than Westinghouse's. Security analysts generally estimate that nuclear power accounts for no more than 5% of GE's sales or profits. The business today comes mainly from refueling and other services provided to existing plants. Says a GE spokesman: ''There is still a good business in servicing the nuclear industry even if we never have another order for a plant.'' SERVICING reactors is just about the only way that Combustion Engineering is making any money at all these days. The company, whose sales last year were a shade over $3 billion, also produces oil-drilling equipment, a line that contributed mightily to its $95-million loss for 1985. Combustion says its U.S. nuclear service business is profitable, however, and the company is also bidding to build a new nuclear reactor in South Korea. Babcock & Wilcox, a New Orleans subsidiary of McDermott International, depends on commercial nuclear business for less than 10% of sales. It is bidding against Westinghouse and others for nuclear business in Taiwan, the Netherlands, Egypt, and Yugoslavia. At home the company, which gained notoriety because it built Three Mile Island, is mired in disputes with regulators over the safety of its plants. A power failure at a California plant last December caused a radioactive gas leak. NRC officials warned that the incident ''has potentially significant implications for other nuclear power plants'' designed by Babcock & Wilcox. Six weeks later the NRC announced it would conduct a major safety review of the instruments and steam- supply systems in eight Babcock reactors, including the Three Mile Island unit not damaged in the 1979 accident. However, Babcock's nuclear business has at least one major source of strength: long-term contracts with the U.S. Navy that seem not to be in jeopardy. The servicing side of the business was plainly helped by Three Mile Island. It led U.S. utilities to spend an estimated $8 billion, largely on safety measures. Chernobyl may also do wonders for this business, recently running at $2 billion a year in the U.S. alone. Even before the Soviet accident, Babcock says, its service revenues were rising 25% a year; the company expects the growth to continue. Chernobyl figures to be more bad news for the utility companies, however. Among the utilities bedeviled by it will be those with completed plants waiting for licenses. Most likely victims in this category: Long Island Lighting Co. (whose Shoreham reactor has produced endless litigation and arguments about evacuation plans) and Public Service Co. of New Hampshire (the largest investor in the equally controversial Seabrook reactor). Antinuclear groups, whose protests have helped delay the opening of the plants by several years, will use the Soviet accident to rally opposition against the utilities. The economics of nuclear-powered utilities have been daunting for years, as even a back-of-the-envelope calculation makes obvious. Using the latest available (1984) industry data, you might estimate that publicly held power companies had a total investment in nuclear plants of about $110 billion. How much is this vast investment returning? In 1984 the nuclear plants generated only about $16 billion in revenues. Suppose their earnings ran at a rate equal to the industry average for all types of electric plants, which was 13.6% of revenues. In that case earnings from nuclear power totaled about $2.3 billion -- a minuscule 2.1% of the estimated investment. Clearly the figures on the back of the envelope are not encouraging for investors. UNTIL CHERNOBYL came along, a fair number of regulators seemed sympathetic to calls for simpler licensing procedures. Even the Union of Concerned Scientists, a group that has been influential in pushing for stiffer safety requirements, acknowledged the need to streamline the licensing process. Now, plainly, the emphasis will be on safety checks rather than regulatory reform. Even if the NRC did nothing much about safety, the utilities would be looking at a scary new issue that seems likely to figure in next November's ! congressional elections. The issue is the amount of liability utilities should bear in the event of a nuclear catastrophe. Current law limits the industry's liability to $650 million; in an accident, utilities would have to pay up to $5 million for each plant they own. Two years ago the industry offered to raise the limit to $1 billion, but antinuclear groups persuaded Congress to hold out for more. Legislators are wrangling over a variety of proposals that could set the liability as high as $8 billion. And even that figure is unlikely to satisfy the opponents of nuclear power, some of whom are opposed to any limits at all. One way or another, the liability of utilities will increase. Looking hard for a silver lining in the Chernobyl disaster, you might plausibly hope that it will at least increase one valuable commodity that has been in short supply in the industry: information about accidents. ''What we're really concerned with is avoiding the extremely rare catastrophe,'' says David Ward of the Advisory Committee on Reactor Safeguards. ''The difficulty there is that you don't get a lot of direct experience. This is an opportunity for us to learn something.'' Unfortunately for the industry, the lesson is not apt to come cheap.