The San Antonio Water System lost a crucial ruling Monday in a $1.23 billion lawsuit it filed against the Lower Colorado River Authority.

Travis County District Judge Stephen Yelenosky ruled the river authority has sovereign immunity and can't be sued by SAWS.

The decision reinforces LCRA's position that it is not obligated to provide water for San Antonio.

Starting in 1999, the two agencies worked together to study methods of conserving and storing water from the Lower Colorado so some of it could be sent to San Antonio. It was estimated the stored water from the Colorado could double San Antonio's supply and make the city less dependent on the Edwards Aquifer. Until 2008, studies showed there was water to share.

LCRA now estimates the region's future water demands will exceed the available supply, even with proposed conservation measures.

“Speaking for our basin, in the future we face water shortages,” LCRA spokesman Robert Cullick said. “We now know what won't work, and we are well on our way to establishing a water resource implementation program.”

The conclusion: San Antonio will have to solve its own water problems.

Last spring, after SAWS had spent $53 million on the studies, LCRA made a presentation to SAWS that the future demands of the Colorado Basin, which include Austin and much of the Interstate 35 corridor, would use all available water, leaving none for San Antonio.

SAWS sued for breach of contract, seeking $1.23 billion, the estimated cost of a desalination plant to get water from the Gulf of Mexico, SAWS' only comparable alternative to the Colorado.

SAWS wanted to argue in court that it was not the science but the board that determined there would be no water for San Antonio. The judge's ruling denied SAWS that opportunity.

“It was not until the policy decisions that LCRA made in December that the yield of the project changed and left San Antonio out in the cold,” SAWS spokesman Greg Flores said Monday. SAWS CEO Robert Puente did not return calls.

Because SAWS funded the studies, the utility contends only it can end the project.

LCRA is ready to reimburse SAWS for half the cost of the studies, which Cullick said is all the river authority owes.

“We never agreed to supply water to San Antonio,” he said.

More than the loss of water, the ruling calls into question the enforcement of any contract that a governmental agency has with another, SAWS said in a statement Monday.

Further, the ruling brings to a close a chapter of regional water planning that was once heralded as the future of supplying cheap water for Texas' growing demand.

At Tuesday's SAWS board meeting, an executive session will be held to consider the utility's options.

If SAWS appeals, the case could take years and millions of dollars more to work through the court system. LCRA said it has already spent $1 million on the lawsuit.

If SAWS decides not to appeal, it can either try to work out a compromise with LCRA or accept the reimbursement of less than half of what it has paid over the past decade on studies, according to SAWS lawyers.