The nuclear power industry plans to create an insurance pool to protect utilities against the losses they suffer when their atomic plants are shut down and they must buy electricity from other companies.

This "down time" has become an issue since the March 28 accident at the Three Mile Island nuclear plant. Critics of the industry contend that it is unfair for consumers to have to pay the extra costs that result from use of what the critics say is an unreliable technology.

General Public Utilities Corp., the company that operated Three Mile Island, has been paying $20 million a month for power to make up for that lost in the shutdown of the nuclear plant.

John D. Selby, chairman of the Nuclear Policy Committee of the industry's Edison Electric Institute, told a House subcommittee yesterday that the insurance plan has not been completed, but "a detailed proposal is being prepared and will be available to the industry for its consideration by the end of October."

Selby testified before the House Interior subcommittee on energy and the environment, which is considering legislation to revise the nation's nuclear power policies. Yesterday's hearing was the industry's chance to address the issues raised by Three Mile Island.

"Property and liability insurance for nuclear power plants has existed for years," Selby said. "However, no protection has been made available for the cost impact of the long-term loss of a low-cost base-load generating plant.

"The plan being worked on contemplates providing the affected utility with an indemnity payment designed to cover part of the cost of replacement power," he said. "How much coverage can be afforded and for how long will be a function of the participation level by the industry . . . "

Selby and three other industry representatives laid out for the subcommittee a list of moves the industry has undertaken to make nuclear power safer and to deal with the "fear factor" resulting from the Three Mile Island accident. They see that factors as a major threat to their industry.

Selby and the other industry witnesses -- A. J. Pfister of the American Public Power Association, Ellis T. Cox of Potomac Electric Power Co., and Byron Lee of the Atomic Industrial Forum -- expressed concern that the alarm generated by Three Mile Island would result in an extended moratorium on nuclear plant construction.

While Selby contended that "basically we have no bias toward any power source," he said he expects the atom to play an increasingly important role in the nation's power supply. He said he regards nuclear and coal as the only two fuels available to meet growing demand for power and he doubted that the coal industry could manage the task alone.

Thus, if there were a nuclear moratorium, he said, "demand would bring nuclear back on a crash basis" later on. But in that case he would not expect the level of safety that could be achieved if the industry were allowed to expand "on an orderly basis."

Pfister acknowledged that "public confidence has been materially reduced" by TMI and "our ability to operate nuclear plants is in jeopardy" from the resulting political pressures.

All four agreed that alternative power sources offer little hope for the immediate future. On nuclear fusion, Cox said, "I couldn't put a date on it within 50 years."

And on his own industry, Cox seemed to sum up his and his colleagues' views of nuclear power development when he told the subcommittee, "We should get on with it."