THE chairman of ScottishPower has questioned the high level of

investment planned for new generating capacity since the electricity

supply industry was privatised.

Sir Donald Miller pointed out yesterday that, at the last count, some

22,000 megawatts of additional generating capacity had been proposed.

Opening a Financial Times conference on the electricity industry in

London, he asked: ''Are the peculiarities of the England and Wales

generation market attracting more investment in new plant than can be

properly justified?''

He also raised concern over the problem of price volatility in the new

market for power. The power pool mechanism now lies at the heart of the

new competitive market for electricity south of the border.

A number of major industrial power users, such as ICI, have become

increasingly critical of aspects of the pool in recent months. A

particular target has been volatility in the pool price, which changes

every half hour.

These questions cannot be ignored, Sir Donald told his audience. He

went on to propose one alternative based on competitive bids for

capacity and energy. ''Such a system could be expected to give greater

transparency of the bidding process,'' he said.

Sir Donald said competition in electricity supply is feasible,

entirely practicable, and of benefit to the customer. But, although

ScottishPower is an active participant in supplying the pool and is a

partner in a scheme to create additional generating capacity in England,

its chairman left the clear impression that he shares some of the doubts

about the way the present structures are developing.

Pointing out that the industry regulator Professor Stephen Littlechild

had recently expressed similar concerns about the pool, Sir Donald

wondered about ''the part played by a pricing system in which generators

have to recover their fixed costs out of the half-hour pool purchase

price''.

He said that, of the 22,000 megawatts of additional capacity planned,

up to 9000 megawatts were already committed. Part of the investment

rationale, he went on, was that new gas-fired plant offered an economic

means of meeting new emission limits. Another factor was regional supply

companies in the south insuring themselves against rapid movements in

pool prices.

''Perhaps one of the questions we should consider . . . is whether

these defects are endemic under the present pool bidding system,'' he

went on.