"Southern Water behaved unacceptably in deliberately misreporting customer service performance to Ofwat and systematically manipulating information to conceal its true performance over an extended period of time and the company has acknowledged this," said Ofwat Chief Executive Regina Finn.
"We expect companies to comply with their obligations and this fine sends a clear message that non-compliance is not a cheap or easy option."
The £20.3 million breaks down into £19.8 million for deliberately misreporting and £0.47 million for providing sub-standard services to customers by failing to meet Guaranteed Standards of Service. A financial penalty may not exceed 10% of the company's turnover.
Companies have a duty under their licences to ensure that the information they provide to Ofwat is reliable, accurate and complete. This allows Ofwat to compare information across the industry and fulfil its regulatory duties. This is essential where customers have no choice of supplier.
Southern Water's shareholders will bear the cost of this fine which will be paid into the Consolidated Fund.