Propane Pre-Buy and Lock-In Contracts: Your Fall Options

Propane suppliers offer four winter contract types: pre-buy, which locks a gallon count and price up front; lock-in, which fixes price per gallon; capped, which sets a ceiling for a fee; and variable, which floats with the market. Multiply gallons by price to get the number that compares against converting to electric heat.

The four contract types and what each one really does

Contract	How it works	The catch
Pre-buy	You purchase a fixed number of gallons up front at a set price for the season.	Capital is committed to one supplier and one fuel before winter starts. Unused gallons are frequently non-refundable or credit-only.
Lock-in / fixed	Price per gallon is fixed but you pay per delivery.	You are protected from spikes and excluded from drops. Often carries a fee, and may require a minimum annual volume.
Capped	A ceiling price, with the benefit of any decrease.	The cap fee is real money and is usually charged whether or not the cap is ever reached.
Variable / market	You pay the going rate at each delivery.	Full exposure to the January spike, which is the specific event the other three products exist to hedge.

A propane supply agreement and separate tank lease laid out for review before a North Georgia homeowner gives notice to convert

What to work out before you sign anything

Total the contract, do not read the per-gallon rate. Gallons multiplied by price is the number that compares to anything else. A rate per gallon is not a budget.
Find the term length. Some agreements auto-renew, and some carry termination provisions that make a mid-season conversion awkward and occasionally expensive.
Separate the tank lease from the fuel contract. They are distinct agreements with distinct exit terms, and confusing them is the most common reason a conversion stalls. See the tank lease page.
Check the minimum-volume clause. If you convert mid-term and stop buying gallons, does a penalty apply?

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The fifth option nobody puts on the comparison sheet

All four contract structures answer the same question: what is the best way to buy propane this winter. None of them ask whether you should be buying propane at all.

The reason the autumn quote is the right moment to ask is timing. A conversion completed in September or early October runs on electricity for the entire heating season. The same conversion started in December means you have already pre-bought gallons you will not burn, in a month when every HVAC company in the county is on emergency calls and lead times have doubled.

If you are converting, sequence it like this

Ask the supplier for a month-to-month or minimum-volume arrangement instead of a full-season pre-buy while the conversion is scheduled.
Keep enough fuel to carry the house until the changeover date. Do not run the tank to empty — a run-out triggers a mandatory pressure test before refill.
Give the tank lease its contractual notice period. Sixty days is common; read yours.
Book the removal only after the new system has run and been commissioned. Never before.

Run your own numbers

Delivered-BTU math, not a marketing estimate. Change any input and the result updates.

$1,768less per winter on electric

Example only: a house burning 850 gallons at $3.20/gal through an 80% furnace, against electricity at $0.13/kWh. Backup strip heat in a hard cold snap is not modeled. Enter your own numbers above.

Delivered heat needed: 62.2 million BTU
Propane cost per delivered MMBTU: $43.71
Heat pump cost per delivered MMBTU: $15.29
Electricity used: 7,320 kWh
This winter on propane: $2,720
This winter on a heat pump: $952

Worked example at typical North Georgia prices. Change any input above and this recalculates for your house. Estimate only, not a guarantee.

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Common questions about pre-buy contract alternatives

I already signed a pre-buy. Can I still convert this year?

Usually yes. Read the contract for minimum-volume and termination terms first. In many cases pre-bought gallons can be drawn down through a dual-fuel arrangement, where the propane furnace is retained as backup — you burn what you already bought while the heat pump carries most of the season.

Is pre-buy ever the better choice?

Yes, if you have a working modern furnace, you are not converting, and you want budget certainty. The failure mode is a household that pre-buys every autumn on autopilot for a decade without ever pricing the alternative.

What happens to unused pre-bought gallons if I convert?

That depends entirely on your supplier's terms. Some carry the credit forward, some refund at a lower rate, some do neither. Find out before you sign, not after — it is a question worth asking in writing.

Where these numbers come from

EIA weekly heating oil and propane prices — the $/gallon series behind the worked examples
U.S. Energy Information Administration — energy conversion calculators — heat content of a gallon of propane

Every contractor in this network holds a current Georgia Conditioned Air or Electrical Contractor license. You can confirm any license yourself before you sign anything — Georgia Secretary of State license lookup.

Get a conversion figure for your address

Send us the pre-buy quote. We will put the conversion number next to it so you are comparing two totals, not a rate against a feeling.

Call (470) 208-3151 or send the details and we will call you back