Ofwat has confirmed that Anglian Water must spend £62.8m on improvements because of “excessive” sewage spills in times of storms.
The water regulator had already proposed the penalty for the private company earlier this summer.
Ofwat has also revealed that 16% of sewage plants owned by Anglian Water did not have the necessary capacity to hold untreated sewage at times of high rainfall, risking it pouring into rivers.
A spokesperson for the firm, which serves most of the East of England, said it would spend £1bn reducing sewage discharge.
Ofwat also ordered South West Water to spend £24m on improvements.
“These are serious breaches and are unacceptable,” said Lynn Parker, senior director for enforcement at Ofwat.
“We understand that the public wants to see transformative change.
“That is why we are prioritising this sector-wide investigation which is holding wastewater companies to account for identified failures.”
She said she was pleased both companies had accepted they “got things wrong” and were “focusing on putting that right”.
Ofwat started its investigation into Anglian Water in March 2022.
It found the firm was discharging untreated sewage into rivers and did not have the monitoring equipment to know if or where discharges might be happening.
A report published earlier said 16% of sewage plants – 58 in total – did not have sufficient storm tank capacity to meet the requirements of the environmental permit.
Ofwat said Anglian Water could have been fined £57.1m – paid to the Treasury – but had instead agreed to spend £62.8m to help stop sewage spills and fund environmental projects.
The money would come from company shareholders, the regulator said.
The firm provides water for Norfolk, Suffolk, Essex and parts of Cambridgeshire, Northamptonshire, Hertfordshire and Bedfordshire.
Anglian Water says it will ensure spills from storm overflows are “minimised” and “assets are compliant with legal requirements”.
Mark Thurston, chief executive officer for Anglian Water, added: “It will take time and investment to achieve a significant reduction in spills, but we are making good progress.”
He said £1bn would be set aside by 2030 to spend on “storm tanks, upgraded monitoring, nature-based solutions like wetlands and sustainable drainage solutions to halve the number of spills”.
