This is the script that I finally was able to get to work.
WebsiteCopy.exe /targetConnectionString:"Authentication Type=Integrated; Server=http://<CRM Server Name>/<CRM Org Name>; " /targetWebsiteName:"Customer Portal" /sourceFile:C:\Temp\CUSTOMER_PORTAL_RTW_R1\Installation\Customizations\customerportal.xml
I am running on an On Premise environment too. I tried about 100 variations of this website copy command line, and finally got this version to work.
NOTE: Keep in mind that this is pushing information to your CRM, so the user running this must have CRM access. (I'm a CRM admin, I don't know if this could be run with "lesser privileges"