bhay:
Nightmare does seem the right word.
A few points. Most (but not all) suppliers subscribe to the ERA Code of Practice. Some suppliers have their own code and you haven't said who your new supplier is. Regardless of which code, no supplier can charge for unbilled energy consumed more than 12 months previously.
When supplies are switched what should happen is the gaining company asks the customer to take a reading on the transfer date. This reading is passed by the gaining company to the losing company. You didn't say whether you were asked and whether you complied. Can't be categorical about the code without knowing the answer to that point. Its important to understand there is only one transfer reading and it appears on the losing company's final bill and the gaining company's initial bill. So being a refusnik doesn't necessarily get you out of paying it may just shuffle the reading to a different bill.
I have no idea whether £1000 was too high or whether £400 is reasonable. Have you never read your meter? Be aware that the Billing Code does require customer cooperation. How can you "deem" a bill to be too high without knowledge of your consumption, something you haven't mentioned.
Regarding the interpretation of the Code with respect to the 12 months rule, EON have no interest in any consumption after the September 2008 transfer date and transfer reading . I don't think the interpretation is clear. It could be that EON are entitled to charge from September 2007 until September 2008. Or perhaps only from Feb 2008 until September 2008. Only the new supplier is entitled to charge for energy consumed both after September 2008 and additional to the transfer reading.
As you say a nightmare.