subject: What is On-Bill Financing? [print this page] Author: Ryan Frank Author: Ryan Frank
As environmental awareness and green energy solutions continue to grow as priorities in everyones mind, homeowners and state legislators are looking for new ways to make it easier for people to live greener. Lately, on-bill financing has been a growing buzzword among utility companies and homeowners looking for eco-friendly solutions to the energy spending problem. On-bill financing helps them upgrade their home electrical systems to more energy efficient ones without having to break their piggy bank. Here are the basics of how on-bill financing options work. How does On-Bill Financing Work? When you exchange your old electrical systems for energy efficient ones, insulate your walls, or make some other energy-saving upgrade to your home, you help make your house greener and more environmentally friendly. The problem is that many homeowners cant afford to foot the initial investment. This is where on-bill financing comes in. It basically works like this: when a customer wants to make an eco-friendly/energy saving upgrade to their home, the utility company pays for it. The customer then pays pack the company gradually via a slight raise on their monthly energy bill. The savings achieved by the new upgrade offset the increased bill, and the customer gets the benefit of not having to bear the full weight of the initial investment. The Options The two main on-bill financing options are loans and tariffs. The loan option works like most conventional loans do. The customer is responsible for paying the loan back to the utility company even if they move out of the house. The tariff option, on the other hand, links the monthly charges to the meter. This means that whoever moves into the house is responsible for the payments. If the owners move out, they dont have to keep paying, and whoever moves in takes up the charge payments. The tariff option has the benefit of allowing for longer payment periods, so that the monthly charges are smaller and much more manageable. It also gives renters an incentive to participate in the program, as they only pay for the energy efficient appliance while they are using it. On-Bill Financing Today A lot of utility companies are still not fully on board with On-Bill financing. They see it as an experimental program that only complicates the billing process. But nonetheless, more and more states are promoting on-bill financing. Currently, California and Connecticut are the biggest proponents of on-bill financing.About the Author:
Ryan Frank is an avid writer and blogger living in San Diego, CA.
