Environmental awareness and energy efficiency has been on many state officials' radars, as the efforts to find new ways of reducing energy consumption continues. One method of encouraging energy efficiency among home owners that is gaining popularity is on-bill financing. There are two main options when it comes to on-bill financing, but before we discuss them, let's look at the program's basic premise.

What is On-Bill Financing?

Making your home more eco-friendly by upgrading your old heating system to a more energy-efficient one, insulating your walls or taking some kind of measure to improve your appliances and electrical systems so as to save energy helps to reduce national energy costs. The problem is that not everyone has the money to make the initial investment on the upgrade. This is where on-bill financing comes in.

It works like this: when a customer wants to make an energy-saving upgrade to their home, the utility company pays for it. The customer pays back the utility gradually, over time, via their monthly electric bill. In this way, the customer can help conserve energy with a new upgrade and without having to absorb the initial cost all at once.

The Options

There are two main on-bill financing options: loans and tariffs. The loan option works in the same way that most traditional loans work. The customer takes the loan and is responsible for paying it back, even if he moves out of the house.

The tariff option works by attaching the monthly upgrade payments to the meter. This means that, when the owner moves out or sells the house, the new owner or occupier takes on the charges.

The tariff option allows for longer payment periods, which translates into lower monthly upgrade payments. This in turn makes it easier on the customer. It also gives renters an incentive to participate, as they'll only be paying for the energy-saving utilities while they're using them.

A lot of utility companies are still less than ecstatic about on-bill financing. They see it as an experimental financing method that only serves to complicate billing. But more and more states are starting to promote on-bill financing so contact a San Diego sustainability consulting agency today. California and Connecticut are currently the two biggest proponents of on-bill financing.