Some 300,000 households in Lancashire had to boil their water in summer 2015 when microbial parasite cryptosporidium was found in the Franklaw water treatment works in Preston.
Sentencing the company at Preston Crown Court, honorary recorder of Preston Judge Mark Brown said: “It was the largest event of its kind since the privatisation of the water industry many years ago and it had a major impact on day to day water consumption.
"There was significant disruption to domestic consumers but also to businesses as well."
The court heard there was no outbreak of illness as a result of the contamination but there was an increase in patients attending GP surgeries, thought to be a result of press coverage.
However, it’s likely that in the minds of many customers there would have been ongoing concerns because confidence had been affected."
He also ordered the company, which has an annual turnover of £1.7 billion, to pay £150,000 costs.
United Utilities pleaded guilty to the charge at Preston Magistrates’ Court in July.
Speaking after the sentencing on Tuesday, the firm’s chief executive Steve Mogford said: "We are very sorry for the impact this had on our customers.
"I know from first-hand the inconvenience this incident caused, having lived in Lancashire for 40 years.
"We have learned valuable lessons from what happened and have put technology and processes in place to guard against a repeat of this type of incident."