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Construction Nearly Completed on New Central Energy Plant to Serve Children’s Hospital of Alabama

Building offers innovative methods for heating and cooling Children’s expansion

BIRMINGHAM, Ala. — A dedication of the central energy plant (CEP) built, managed and maintained by Johnson Controls (NYSE: JCI) of Milwaukee was held today near the construction site of the Children’s Hospital expansion. The CEP offers an innovative and cost-effective approach to providing the energy that will be needed to heat and cool the 740,000-square-foot Children’s Hospital expansion facility currently under construction.


The event was attended by Children’s and Johnson Controls’ leadership teams as well as Birmingham mayor William Bell and other community

The decision to seek a third party energy provider was made following a careful analysis of a number of factors related to the costs of building a utility plant as part of the expansion project. Third party ownership of the plant enabled the hospital to avoid a $35 million initial capital investment in first construction costs and move forward with construction of the expansion while protecting its bond rating and debt capacity. “We considered building the utility plant ourselves, but did not want to direct capital dollars towards an additional construction project on top of our ongoing expansion,” said Mike McDevitt, executive vice president, Children’s Hospital. “We realized that instead of becoming our own utility provider, we should look at heating and cooling service as a commodity, and purchase it from an efficient energy provider.”

Children’s selected Johnson Controls to develop a strategy to build, own, operate and maintain the central energy plant. The plant’s design was developed through collaboration between Johnson Controls and other mechanical, electrical and plumbing firms to maximize efficiency. “In many industries, it’s common for a third party to provide cooling and heating utility services,” said Steve Quirk, director health care business development, Johnson Controls. “We worked with the hospital’s administrators to develop a plan that would reduce their initial capital investment while increasing long term operational efficiencies.”

Upon completion of the plant, a utility services agreement provides financial predictability throughout construction and ongoing maintenance while guaranteeing levels of energy efficiency, uptime and plant performance. Also, the formation of a Government Utilities Services Corporation between Children’s, UAB and the city of Birmingham enabled the Children’s to secure tax-exempt financing for the plant’s construction and to minimize the cost of materials.

The strategy will help Children’s save an estimated 10 to 12 percent in projected energy costs. The savings will be redirected to resources for providing patient care.

The design of the building is intended to complement the expansion facility. It is completely automatic, requiring only one person on site during business hours. Its operation is monitored outside business hours remotely. The plant has the capacity to heat and cool 1,500 homes and can activate emergency power for the hospital in eight seconds.

Construction of the CEP is nearly completed while construction of the expansion of Children’s Hospital is expected to be completed mid-2012. The expansion will stand 12 stories tall and house 332 beds plus 48 neonatal intensive care unit bassinets, additional general operating rooms, a larger emergency department and larger patient rooms designed in a family-centered manner. Two specially-equipped cardiac operating rooms will allow the relocation of pediatric cardiovascular surgery services from UAB to Children’s.

The expansion of Children’s Hospital is the largest health care construction project in the history of the state of Alabama and is expected to generate more than 1,700 new jobs with a $70 million construction payroll. It is expected to receive LEED certification as a result of the numerous reusable, sustainable and environmentally friendly aspect of its design and construction.

About Children’s Hospital
The Children’s Hospital of Alabama is the 10th busiest pediatric medical center in the United States. Located in Birmingham, Children’s is one of only about 45 freestanding acute care hospitals of its kind in the nation and the only hospital in Alabama dedicated solely to the care and treatment of children. It is licensed for 275 beds. Children’s is a private, not-for-profit hospital governed by a volunteer board of trustees. The hospital was recently recognized for the excellence of its nursing care by achieving Magnet designation from the American Nurses Credentialing Center. Children’s will celebrate its centennial anniversary in 2011. For more information, visit www.chsys.org.

About Johnson Controls
Johnson Controls is a global diversified technology and industrial leader serving customers in over 150 countries. Our 130,000 employees create quality products, services and solutions to optimize energy and operational efficiencies of buildings; lead-acid automotive batteries and advanced batteries for hybrid and electric vehicles; and interior systems for automobiles. Our commitment to sustainability dates back to our roots in 1885, with the invention of the first electric room thermostat. Through our growth strategies and by increasing market share we are committed to delivering value to shareholders and making our customers successful.

About Johnson Controls Building Efficiency
Johnson Controls Building Efficiency is a leading provider of equipment, controls and services for heating, ventilating, air-conditioning, refrigeration and security systems for buildings. Operating from 500 branch offices in 150 countries, we deliver products, services and solutions that increase energy efficiency and lower operating costs for over one million customers. We are involved in more than 500 renewable energy projects including solar, wind and geothermal technologies. Our solutions have reduced carbon dioxide emissions by 13.6 million metric tons and generated savings of $7.5 billion since 2000. Many of the world’s largest companies rely on us to manage 1.5 billion square feet of their commercial real estate.

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Posted December 15, 2010

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