This is when a utility company or a third party such as a financial institution incurs the cost of the upgrade and the customer repays the company through a monthly charge on their utility bill. This eliminates the upfront cost by the customer since the costs are financed by the company, including those costs that are not covered by the rebate.

There are two types of on-bill repayment programs: on-bill loans and on-bill tariffs

On-Bill Loans are like business or personal loans and when the customer wants to move, they have to repay the full loan.

On-Bill Tariffs actually are attached to the meter. When a customer moves, the next customer continues to repay the financing. On-Bill Tariffs are much more complicated to setup, but this allows for a longer financing term.

Advantages Disadvantages
Can use capital from different sources
Can be complicated to setup (especially the on-bill tariff)
Savings are tied directly with repayment on the same bill
Utilities are reluctant to take on the financing role. Possible exposure to consumer lending laws and billing system alterations are required.
Can meet the needs of different markets
Limited to shorter term financing (on-bill loans only)
Secured revenue stream since failure to pay lead to disconnection
Entire loan must be paid off upon the sale of the property (on-bill loans only)
Can use past repayment as a means for credit
Allows for longer term investments (on-bill tariffs only)