A group of Coalition MPs are so intent on propping up AGL's ailing Liddell power station they are calling on the Turnbull government to forcibly acquire the coal-fired power plant.
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But Energy Minister Josh Frydenberg all but ruled out the idea on Thursday, insisting the federal government was not going to start nationalising assets.
The charge for intervention is being led by Nationals MP George Christensen, but other MPs are said to have a degree of support for the idea, including former prime minister Tony Abbott and former deputy prime minister Barnaby Joyce.
Mr Christensen told Fairfax Media a compulsory land acquisition would mean the government could run Liddell itself or, if necessary, sell it to interested Chinese giant Shandong Ruyi.
"I don't know whether we have the head of power to actually compulsorily acquire it, but I think it should be absolutely explored. And if we need legislation then that should be considered," he said.
Mr Christensen said he had raised the issue with ministers and was told the intervention would require new laws.
"I would encourage that, particularly if the only other option is we lose a coal-fired power station," Mr Christensen said.
He stressed he wanted the federal government to operate the power plant, but selling it to a Chinese buyer was palatable.
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"I don't like the idea of Chinese owning stuff, particularly if it's a state-owned enterprise, but the government could facilitate ownership to another party if the government doesn't want to own it," he said.
"We own Snowy right now, so it's not a new thing for the Commonwealth to actually own a power station."
But Mr Frydenberg quickly rebuffed the idea.
"The government's not about to nationalise the Liddell power station," he said on Thursday. "That being said, we are concerned about the impact on the reliability of our system from its proposed closure in 2022."
Liddell's owner, AGL, would not comment on the proposal but pointed to its blueprint to replace the station's power output using a mix of gas generation, renewables and battery storage.
Nationals MP Andrew Broad, who chairs the House of Representatives' Environment and Energy committee, said a compulsory acquisition was not the way to go, but the government could get involved in building an entirely new coal-fired facility.
A Liberal MP on that committee, Craig Kelly, said a compulsory acquisition of Liddell was a "very, very large step" but stressed: "We have to do everything we possibly can to keep it open."
But he said the Turnbull government should firstly pursue AGL through the courts using previously untested arms of the Trade Practices Act.
"There is arguably a case that you could at least run a test case under the new competition laws to force AGL to offer it to a competitor, to put it on the market," Mr Kelly told Fairfax Media.
Mr Abbott and Mr Joyce raised questions during a party room meeting this week as to why the government wasn't doing more to facilitate the sale of Liddell to a buyer who would keep it open.
It prompted a terse response from Prime Minister Malcolm Turnbull, who reminded the room that Liddell was an asset of a private company. Mr Abbott declined to comment to Fairfax Media.
Mr Joyce said this week he would do "everything in my power" to make sure the government did "something" to ensure Liddell stayed open.
Conservative Liberal senator Eric Abetz was quoted by The Australian saying AGL should sell Liddell to a willing buyer or "the government should take it over". LNP Luke Howarth, also on the energy committee, said he would support that "if it means it's going to help lower power prices".
Resources Minister Matt Canavan declined to endorse a takeover. He called on AGL to financially commit to its entire plan to meet the 850 megawatt shortfall from the closure of Liddell in 2022.
