Water services regulator Ofwat says it plans to fine Southern Water £20.3 million for misreporting information.
The watchdog says customers missed out because of the utility firm's failure to report its "poor process and systems".
Chief executive Regina Finn said Southern Water had "systematically manipulated" details of its true performance from Ofwat and emphasised the cost of the fine would be borne entirely by shareholders.
"Customers received higher than necessary bills because of the company's deception," she said.
"The magnitude of this fine reflects the magnitude of the offence – deliberately misleading the regulator, failure of the Southern Water board of directors to pick up the deception, the resulting poor service to customers and damage to the regulatory regime, in general."
Southern Water accepted the fine and pointed out that the irregularities had "ironically" been discovered during upgrades to its customer service section.
"I understand Ofwat's intention to fine us for what happened in the past," chief executive Les Dawson said.
"Today, I would like to reassure customers that those historically entitled to guaranteed standards payments have now been paid and that we are well on course to meeting a service improvement plan agreed with the regulator."
Digg 
Delicious 
Reddit 
StumbleUpon 
Google 
Technorati 
Netvouz