Northumbrian Water has agreed to pay out £15.7m after failures in the maintenance and operations of its sewage and water network.
Water sector regulator Ofwat said the firm would pay out the “enforcement package” to local environmental causes and improvements to the region’s water infrastructure.
The company’s failures led to “excessive spills from storm overflows”, the watchdog found.
It comes a week after Thames Water was fined a record £122.7m having broken rules over sewage treatment and paying out dividends.
Ofwat said the enforcement package for Northumbrian Water was “greater than the penalty which would otherwise have been imposed” if it had fined the business.
It also said the package agreed with the company meant it would be spent on local improvements for customers, rather than being directed to the Treasury’s consolidated fund.
Northumbrian Water chief executive Heidi Mottram said: “We agree with Ofwat’s announcement that the financial settlement will be directed into speeding up our storm overflow reduction plans and in meaningful local initiatives via our Branch Out fund.
“This investment, which will come entirely from Northumbrian Water shareholders and will not be paid for by customers’ bills, will enhance our ongoing efforts to support local communities and protect and improve the natural environment here in the North East.”
Lynn Parker, senior director for enforcement at Ofwat, said: “Our investigation has found failures in how Northumbrian Water has operated and maintained some of its sewage works and networks, which has resulted in excessive spills from storm overflows.
“The contraventions we have found at some of their sites will have had an impact on the local environment and customers and it is unacceptable.”
She added Ofwat now expected the water company “to move at pace to correct the issues our investigation has identified”.
Northumbrian Water said in December last year it planned to increase its average water bills by around 21% over the next five years.
