Eon gets tough as energy firms prepare for the credit crunch

Eon gets tough as energy firms prepare for the credit crunch

Energy companies are cracking down on customers who don't pay promptly by making it harder to default on payments. Eon, which recently put prices up by about 15 per cent, has amended the conditions of its contracts so it can demand a security deposit from those who don't pay promptly, or even request that a guarantor is provided.

It has also added a section stating that it will check an applicant's credit record before supplying gas and electricity and will share information about anyone failing to pay on time with a credit reference agency.

British Gas, Eon and EDF now all say they will do a credit check on customers, according to Joe Malinowski of comparison website Theenergyshop.com, while Npower, Utilita, Scottish Power and Scottish & Southern Energy reserve the right to do one. 'The credit crunch is starting to make energy companies nervous about their customers' ability to pay,' he said. 'This move by Eon suggests that it is aware that bad debts are likely to rise as household budgets come under pressure and that it is preparing itself to be able to do something about it.'

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The Eon changes come as credit criteria are being tightened by private and public-sector bodies. Egg recently blocked 161,000 credit cards, while The Observer revealed last week that local authorities were taking an increasingly tough stance over council tax arrears.

Meanwhile, online energy switching companies were hit last week by a rush of customers cancelling orders for British Gas's online tariffs, Click Energy 4 and 5, after it sneaked in 19 per cent price rises late on the previous Friday. Customers have between seven and 14 days to cancel a contract after signing up. The online tariff had been the cheapest on the market, but the hike puts the average Click Energy bill up by around £138.

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