(Bloomberg) -- Thames Water said it will need to spend £1.1 billion ($1.4 billion) more than previously thought to fix chronic leaks and sewage spills, despite not having the backing of its shareholders for new equity.

The UK’s largest water and sewage utility issued a delayed update to its proposed five-year business plan on Monday, in a last-ditch attempt to get the support of the regulator, which is due to publish its draft decision in June.

Thames said it now expects to invest £19.8 billion over the five years to 2030, which is 7% more in spending than when it first announced the plans in October. Thames said the increase was needed to fund projects “benefiting the environment.” 

It stuck to its previous estimates that average annual bills will rise 40% to £608 by the end of the decade. With inflation added, the cost would increase by 56% over the period, it has said. 

However, Thames also said Monday it could invest a further £1.9 billion in its network over that period if it can secure the necessary service and equipment contracts amid high supply-chain competition. If all that money were to be invested, Thames would need to seek further approval from Ofwat to raise bills to £627 per year.

But it remains unclear how Thames will fund the investment. With £16 billion of debt, it’s the most highly leveraged of its peers, and desperately needs to find billions of pounds in equity for the five year business plan, which is required by the regulator Ofwat. While Thames spends the money upfront, most of it is recouped through consumers bills, which are controlled by Ofwat.

How Debt and Sewage Pushed Thames Water to the Brink: QuickTake

Last month, Thames’s shareholders refused to inject any more money into the business, blaming restrictive regulation from Ofwat. The company’s parent Kemble Water Holdings Ltd. then defaulted on its debt a week later after failing to make an interest payment.

With no new equity to support the utility and a parent that’s in default, the company’s spending plan looks doubtful. 

“Thames has to go through the motions,” said Tim Whittaker, research director at the EDHEC Infrastructure & Private Assets Research Institute. “It generally has to look like it’s making an effort whether or not it’s financeable or even realistic.”

Ofwat is investigating Thames for paying £37.5 million dividend to parent company Kemble Water Holdings last October, which needed the cash to service its own debt. The verdict is seen by analysts as crucial to the future of the utility.

If the situation gets worse, the government is prepared to take Thames Water into special administration under updated insolvency rules for water companies, but ministers have pressed the company to sort out its own financial mess. Environment Secretary Steve Barclay rebuffed a plea for help from Kemble to intervene in the Ofwat process. 

Thames is the last of all the water and sewage companies to update its business plan, which is required by the regulator under a five-yearly price review process, known as PR24. Ofwat is due to announce its draft decision on June 12 with a final determination in December. 

(Adds detail on bill increases in fifth paragraph)

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