Nuclear power, whose growth phase ended two decades ago amid the public terror over Three Mile Island and Chernobyl, finds itself on the precipice of rebirth.

After years of being shunned for political and financial reasons, nuclear energy is back in vogue as prices for other fuels have spiraled skyward. Rising electricity demand, billions of dollars in new federal subsidies and pollution controls on coal- and gas-fired power plants are weakening old taboos. For the first time since the Arab oil embargo, utilities are applying to build new reactors in the U.S. -- 12 at last count.

Probably the biggest single factor in the resurgent interest in nuclear power is the rise of natural gas prices to record highs; prices have quadrupled over the past 10 years to $8.34 per million British thermal units. Even though oil and gas companies have stepped up their drilling, supplies have not kept pace with demand. The country now depends on natural gas for 24% of its energy consumption, thanks to a construction boom of natural-gas-fired power plants in the 1990s.

Rising energy prices have changed public opinions about nuclear power -- although significant opposition still exists. In a May 2005 Gallup poll, 54% of respondents said nuclear energy should be used to generate electricity, a 6-percentage-point increase since 2001. Still, most Americans, about 63%, say they don't want a nuclear plant built near their home.

Nuclear energy has gotten a boost from President Bush, who sees alternative fuels as a way to reduce the country's reliance on imported oil and boost homeland security. Last year's energy bill streamlined licensing regulations and gave the nuclear industry $2 billion in incentives and tax breaks. Nearly $10 billion has been earmarked toward developing alternative energies, such as nuclear, since 2001. In his State of the Union speech Tuesday night, Bush announced a new initiative to increase clean energy research in coal, solar, wind and "clean, safe nuclear energy" by 22%.

"We ought to have more nuclear power in the United States of America," Bush said in a Jan. 19 speech in Sterling, Va. "It's clean, it's renewable, it's safer than it ever was in the past."

The trend is in place in Europe and Asia. Russia's decision to slash natural gas supplies to Western Europe over a price dispute with Ukraine in December underscored the region's own need to diversify energy sources. The standoff prompted Ukraine, Italy and Germany to reconsider nuclear energy and other countries, such as Poland, to continue work on new reactors. China, hungry for energy for its booming economy, plans to build as many as 27 reactors by 2020. France and Finland each have one in the works.

Utilities have taken notice, and two months after the energy bill's passage in July, at least seven companies announced their intentions to build new reactors. Entergy ( ETR - Get Report), Dominion Resources ( D - Get Report), Exelon ( EXC - Get Report), Southern Co. ( SO), Duke Energy ( DUK - Get Report), Progress Energy ( PGN) and Constellation Energy Group each have said publicly that they're considering new reactors, while a handful of other companies are quietly looking at them, says Scott Burnell, a public affairs officer at the Nuclear Regulatory Commission.

Over the past two months, nuclear power has drawn a flurry of large deals. FPL ( FPL), a Florida utility, became the country's third-largest nuclear power operator when it bought Constellation Energy for $11 billion last year. British Nuclear Fuels said it would sell Westinghouse Electric, a Pittsburgh company that designs and builds nuclear power plants, to Toshiba for reportedly $5 billion in January. General Electric ( GE - Get Report), Mitsubishi Heavy Industries and Hitachi had been vying to purchase Westinghouse, a leading player in the Chinese nuclear power market.

Progress may build two nuclear plants to feed its growing need for electricity. Over the next decade, the utility's customer base is expected to jump 10% to 3.2 million. The average operating expenses for a nuclear plant is 1.86 cents per kilowatt-hour, compared with 1.92 cents for coal and 5.87 cents for natural gas, according to the Edison Electric Institute, an industry association.

"It's primarily cost," says Keith Poston, spokesman for Progress Energy of Raleigh, N.C. "The price of natural gas doesn't make sense. Coal is better, but environmentally it's more expensive."

Leery of future taxes or limits on carbon emissions, some utilities have steered away from coal and natural gas plants because of the potential of higher electricity prices. Carbon contributes to increased levels of greenhouse gases.

Still, utilities are taking their time to put together applications for new reactors because the costs are huge, the construction time long and the rate of return slow. It takes about seven years to get through the federal government's lengthy review process, which costs in excess of $50 million, four years to build and another four to recoup the investment. Most utilities wouldn't begin construction until 2014. Reactors carry an overall price tag of $1.5 billion to $2 billion each.

"People are concerned it's going to do something to their share price," says Adrian Heymer, senior director of new plant development for the Nuclear Energy Institute, a Washington-based industry association. "They want to make sure they have off-ramps should something occur."

Construction is expected to run about $1,500 per kilowatt, double the amount of a coal plant, according to a Jan. 9 Standard & Poor's report. Cost overruns could be possible because of new designs and technology.

"Designs are just that, designs," says Paul Gunter, director of the reactor watchdog service at the Nuclear Information and Resource Service, a Washington-based environmental nonprofit. "They haven't been used."

Utilities would likely rethink their nuclear plans if there was a sudden downturn in the economy or a major nuclear disaster; neither appears likely. Although natural gas prices could drop, they would have to fall below $5 per thousand cubic feet before natural gas would be cheaper than nuclear power. With low domestic production and growing demand from the U.S. and Asian economies, prices aren't likely to come down anytime soon.

"Nuclear plants are extremely profitable right now," says Timothy Winter, a utility analyst with AG Edwards in St. Louis. "The merchant plants in nonregulated markets are minting money."

That has not always been the case. Electric companies have been hesitant to build new reactors after losing billions and canceling plans for 60 new reactors following the oil crisis in 1973 and the partial meltdown of the Three Mile Island nuclear plant six years later. The last commissioned plant was in 1973. The explosion at the Chernobyl nuclear power station in Ukraine 20 years ago prompted renewed safety concerns. New improvements in plant designs, though, may make reactors safer and easier to build and operate.

Storing waste is another issue. The federal government will eventually have to set up a central storage facility for toxic nuclear byproducts. Most spent fuel is currently stored at nuclear plants, which are quickly running out of room. Plans to set up a national repository in Yucca Mountain, 90 miles north of Las Vegas, have run aground amid litigation and political fights.

Low public support for new reactors and surging energy demand have forced utilities to upgrade the generating capacity of their aging reactors while they wait to build. The NRC has approved 101 upgrades since the 1970s for an additional 4,183 megawatts of electricity, or the equivalent of four reactors. Utilities typically trade up to better parts and more highly enriched uranium to generate additional energy. Those improvements have allowed reactors to increase their volume to 95%.

But those upgrades can help only so much when electricity demand is forecast to double by 2030, according to the Energy Department. Around 20% of the country's electricity now comes from the nation's 103 reactors.

"If we could just put up five nuclear plants," says Winter, "we'd drastically reduce our reliance on natural gas."