The Bay area's water firm United Utilities has been fined £300,000 after supplying water unfit for human consumption to 700,000 customers.
People in Lancashire were forced to boil their water for several weeks in the summer of 2015 after a parasite was found in the Franklaw water treatment works in Preston.
Residents south of the Junction 33 roundabout at Galgate were affected, including areas along the A6 like Forton, Scorton and Garstang.
The firm admitted supplying water unfit for human consumption at an earlier hearing and will also have to pay £150,000 in prosecution costs.
The parasite, Cryptosporidium can cause diarrhoea, stomach cramps and vomiting if ingested.
The lack of safe drinking water caused supermarkets to restrict the amount of bottled water bought per customer after there was a surge of panic buyers.
United Utilities has so far paid out £25m voluntarily in the form of compensation to householders and businesses affected, providing one million bottles of drinking water at the time of the contamination and donations to charity.
Preston Crown Court heard that the contamination happened because the parasite found its way into a service reservoir holding treated water that had structural defects.
The company, which has an annual turnover of £1.7bn, has invested £100m into improving its treatment process so further contamination does not occur, the court heard.
There was no outbreak of cryptosporidium disease as a result of the contamination - with the judge accepting there was no evidence to suggest the contaminated water caused people to fall ill.
Honorary recorder of Preston Judge Mark Brown said United Utilities did not carry out risk assessments which could have prevented the outbreak.
He 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."
United Utilities' chief executive Steve Mogford said the firm was "very sorry for the impact this has 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."