SOUTH West Water, branded by West Somerset MP Ian Liddell-Grainger as 'the worst water company in the country', has been hit with a £12 million fine for poor performance.
The industry regulator, Ofwat, has ordered the water firm to pay back the money to customers in the form of discounts on their bills.
Ofwat also said it was investigating South West Water over the accuracy of the firm's reporting of its leakage and consumption performance.
It comes as the regulator carried out an assessment of all of the nation's water companies, issuing in total £114 million worth of fines to 11 firms.
David Black, Ofwat chief executive, said: “The targets we set for companies were designed to be stretching – to drive improvements for customers and the environment.
"However, our latest report shows they are falling short, leading to £114m being returned to customers through bill reductions. While that may be welcome to billpayers, it is very disappointing news for all who want to see the sector do better.
“It is not going to be easy for companies to regain public trust, but they have to start with better service for customers and the environment. We will continue to use all our powers to ensure the sector delivers better value.”
Companies were graded across a number of areas, including leakage, pollution incidents, and customer satisfaction. They were categorised as 'leading', 'lagging', or 'average.
Despite being hit with a fine, South West Water managed to secure an 'average' grading - with no firm successfully ranked in the 'leading' category.
The fine comes amid a campaign against South West Water by Mr Liddell-Grainger, who will be the Conservative candidate for the new Tiverton and Minehead constituency taking in much of the area around Wellington.
Mr Liddell-Grainger accused the company of having 'a broken moral compass and a cavalier attitude to its own filth'.
Speaking recently in Parliament, he said: "For 10 disgusting years South West Water has been dumping raw sewage in the lovely rivers of Devon and Cornwall.
"For 10 disgraceful years South West Water has been dishing out huge dividends to its shareholders instead of investing to clean up its own filthy act.
"For 10 deplorable years South West Water has been rated as red by the Environment Agency.
"Red for appalling. Red for risky. Red for downright dangerous."
A SWW spokesperson said: “We continue to deliver significant improvements in our performance, but we know there is more still to do.
"Today’s report is just one part of a much larger picture for our group. However, it does reflect some of the improvements and progress we are making."