San Diego, Calif.- The City of San Diego is expected to file a lawsuit against San Diego Gas and Electric over costs and complications related to the Pure Water project, sources tell IVN San Diego.

The city is building the more than $1 billion water recycling project, that when completed, will purify about a third of the city's drinking water by 2035.

City officials say the program offers a cost-effective investment for San Diego's water needs, but also say, the costs are beginning to balloon. The Pure Water facility has become one of the most expensive capital projects in city history, with a skyrocketing tab of at least $50 million more than expected.

City officials say that is due in part, to SDGE not willing to pick up the tab to relocate gas and power lines to accommodate the water-recycling plant, stipulating it is the city's responsibility to pay for the

The Responses

IVN San Diego reached out to the City Attorney's office and SDGE for comment. Each responded with emails reinforcing their positions.

The City Attorney's office released the following statement:

"Under the terms of the 1970 Electric Franchise Agreement and the 1970 Gas Franchise Agreement, SDG&E is responsible for the cost of relocating utility lines to make way for the Pure Water San Diego project. The City Attorney’s Office is committed to enforcing the terms of those agreements."

SDGE does not agree and sent a correspondence between the City Attorney and utility company that lays out the company's position.

San Diego Gas and Electric notes in their letter to the City Attorney:

"SDG&E is not responsible for the utility relocation costs related to the Morena Pump Station and Conveyance System. This determination was made because the station is not a public street project and therefore, not covered by the relocation provisions fo the franchise agreement between SDG&E and the City. SDG&E finds that it is not responsible for any utility relocation costs in the franchise area."

The entire correspondence is below.

SDGE/City Attorney Correspondence

City Council Agreed To Pay SDG&E

At the request of Mayor Kevin Faulconer, the city council, according to published reports, agreed to pay SDG&E $35 million to move gas and power lines so work can start on Pure Water San Diego.

To build the plant and connect it to the rest of the city’s water system, the city must move some of SDG&E’s equipment. The company’s stance will also apply to additional water department projects, likely increasing those construction costs by nearly $100 million over the next several years.

The Legal Battle

As noted in the City Attorney's statement, the dispute goes back to a pair of contracts SDG&E signed nearly 50 years ago. The Electric and Gas Franchise contracts from 1970.

These agreements allow the company to use public rights-of-way to install poles, overhead power lines and underground gas and electric lines. For that privilege, the company pays the city about $64 million a year in fees; in exchange, the company gets a monopoly on energy infrastructure.