Southern Water has been hit with a record £126 million package of fines and customer rebates after "serious failures" in its sewage treatment sites and deliberately misreporting its performance, regulator Ofwat has announced.
Customers will now receive rebates of £61 over the next five years.
The fine is the largest the water regulator has ever imposed on a company.
Ofwat said its large-scale investigation found Southern Water failed to operate a number of wastewater treatments works properly, including by , which led to equipment failures and spills of wastewater into the environment.
It added that Southern Water also manipulated its wastewater sampling process, which led to it misreporting information to the watchdog and avoiding penalties.
Southern Water supplies customers with water and treat wastewater across Kent, Sussex, Hampshire and the Isle of Wight.
Their main headquarters operate in Worthing in West Sussex.
Southern Water will refund £123 million to customers through their bills and pay a fine of £3 million.
The rebate includes £91 million in penalties Southern Water had avoided and a further £32 million of payments as recognition of its serious failures.
In January 2017, Ian McAulay met with Ofwat after the EA started an investigation into a small number of Southern Water's wastewater treatment sites.
In June 2017, its wastewater treatment compliance was under investigation by Ofwat due to breaches of its licence conditions and statutory obligations between 2010 and 2017.
Some of the issues highlighted in the investigation include:
Rag and debris causing a number of equipment failures on sites, some of which had led to compliance issues.
The majority of sites were identified as potentially having flow compliance issues, i.e. issues relating to the amount of wastewater flow that is required to be treated.
Maintenance resources had potentially been stretched leading to reactive activities given preference over preventative maintenance.
The Environment Agency is now investigating Southern Water and the environmental impact of its actions.
Southern Water apologised and outlined how customers would receive £17 off their bills in year one, followed by £11 a year for the next four years.
Chief Executive, Ian McAulay says: "We are profoundly sorry for these failures and have been working very hard to understand past failings and implement the changes required to ensure we better deliver for our customers and meet the standards they deserve.
We know that a number of failures of people, processes and systems allowed these breaches to occur and we have acted promptly and decisively to make sure that all of the issues identified in the investigation have been addressed.
We have also put new systems in place to safeguard our services, our whistle-blowing procedures have been enhanced, and a revised set of company values have now been embedded.
These actions, along with a modern compliance framework, are already changing the culture in Southern Water."