Water regulator Ofwat has confirmed it is fining Midlands water company Severn Trent Water a total of £35.8 million for deliberately providing false information and poor customer service.
Ofwat proposed the fine - the biggest ever levied by the regulator - in April after ruling that customers had paid higher bills than necessary because of the failings.
Regulators have spent three months consulting on the fine, and said that it was being upheld after representations were received from two parties - the Consumer Council for Water and Severn Trent Water.
Ofwat has stipulated the cost of the fine will be borne by shareholders. "It will not be passed on to its customers," the regulator said.
The announcement comes a day after Severn Trent - which has 3.7 million household and business customers - was fined another £2 million for lying about water leaks.
Regarding the £35.8 million fine, Ofwat said the firm deliberately provided false customer service data in 2005 and earlier years, such as how it performed on making and keeping appointments and the number of customers who received no replies to complaints.
The water firm is being fined £34.7 million (2.9% of its 2006/07 turnover) for misreporting the information, and £1.1 million (0.1% of its 2005/06 turnover) for providing sub-standard service to customers.
Ofwat chief executive Regina Finn said: "Severn Trent's behaviour was unacceptable. The size of the fine reflects how seriously Ofwat takes the deliberate misreporting of information.
"This sends a clear message to the company and to the rest of the water sector: Ofwat will protect consumers and companies must comply with their legal obligations or pay the price. Any further attempts to deliberately mislead Ofwat could lead to even bigger fines in the future."
The firm said it would study the Ofwat decision and respond in due course. It has 42 days to launch a High Court appeal and must pay by August 22 if it chooses not to.