Ordinary energy users will pay dearly with higher power bills for new laws locking up coal seam gas (CSG) reserves, says AGL Energy.
AGL used the announcement of a tripling in half year profit on Wednesday to attack the NSW government's recent introduction of no-go zones for controversial CSG drilling close to housing.
It will probably lead to a write-down in the value of its NSW Camden CSG project - the expansion of which has been suspended - and Hunter Gas, which have a book value of $325 million.
East coast annual gas demand is expected to triple by 2017, causing tension with the developers of new mega liquefied natural gas (LNG) projects who want to export offshore and lift prices.
Santos has already said it is selling gas into eastern Australia at $9 per gigajoule, confirming previous analyst predictions that LNG exports would push up prices from just $3/G.
A day after what he said was a constructive meeting with NSW Premier Barry O'Farrell, AGL chief executive Michael Fraser accused the government of "cutting off your nose to spite your face".
Community anger about safety had forced the decision, which Mr Fraser says was not based on scientific evidence.
"We need to be able to address community concerns, to build community confidence while at the same time not putting in place regulations that effectively sterilises the state's resources in perpetuity," he said in a teleconference.
Mr Fraser said while he did not support the calls to reserve gas for Australian companies, he sympathised and warned NSW's economy would be seen as a sovereign risk.
AGL was already involved in legal disputes costing millions of dollars with gas suppliers wanting to lift prices, he said.
AGL, Australia's second largest energy retailer, impressed the market with a tripling in half-year net profit to $365 million, driven by its acquisition of Loy Yang A, Australia's third largest coal fired power station.
Underlying profit was $279.4 million, up 20 per cent.
Its shares shot up 68 cents, or 4.5 per cent, to $15.87.
Morningstar analyst Gareth James said he was impressed that AGL had increased its number of retail customers when rivals Origin Energy and Energy Australia had lost them.
The company's energy generation - selling power wholesale into the national grid - contributed earnings before interest and tax of $575 million, compared to $136 million in retail EBIT.
It has forecast full year underlying profit of $590-$640 million, constrained by pricing regulation and low demand for electricity.
The company increased its fully-franked dividend to 30 cents a share, from 29 cents.