Laser-focused consumer laws could and should force AGL to sell its Liddell power station to a competitor willing and able to keep it open, a pro-coal federal MP says.
Liberal Craig Kelly has called for specific new rules around essential services.
He wants Australia to introduce European-style laws that prevent companies that hold a dominant position in the market from limiting production in ways that would prejudice consumers.
"We would have a case, a clear-cut case against AGL's conduct with Liddell," he told parliament on Wednesday night.
Mr Kelly is one of several MPs pushing for the company to sell its NSW power station to Hong Kong-owned company Alinta, which had its $250 million offer rejected last month.
AGL said the offer was not in the interests of the company or shareholders. It plans to close the plant at the end of its life in 2022 but released a plan to replace lost capacity.
Mr Kelly accused AGL of "anti-competitive conduct".
He doesn't want to see AGL forced to keep the plant open against their wishes.
"But if they have competitors in the market that are willing and able and prepared to buy that plant from them I say they are engaging in conduct that will limit production and it will be to the prejudice of consumers," he said.
Mr Kelly, along with former prime minister Tony Abbott, is threatening to cross the floor on the Turnbull government's energy policy.
The National Energy Guarantee is technology agnostic, meaning no subsidies for coal or renewables.
Steelmaker BlueScope, resources giant BHP and the minerals, farming and business lobbies met with more than 30 coalition MPs on Tuesday asking them to support the plan.
Four coalition MPs spoke against the guarantee in a partyroom meeting on Tuesday after hearing from lobbyists, but at least 12 MPs supported the plan.
Mr Abbott wants any legislation to come back to the partyroom before it is put to parliament.
Prime Minister Malcolm Turnbull said it will be dealt with in the usual way.
Labor has warned any concessions for coal to appease coalition dissenters will result in a failure to reach bipartisan consensus on energy.
"Any subsidy for new coal in the NEG will destroy any chance of the government attracting broad support for its policy," Labor energy spokesman Mark Butler told The Guardian.