Severn Trent Water (STW) has seen its half-yearly profits hit after Ofwat demanded it tackle its leaky pipes.
The regulator's fine for poor customer service also ate into earnings - reducing pre-tax profits by £3.2m after one-off costs.
Earlier this year Ofwat ordered SWT to spend £170m plugging holes in its pipe network - which lost 540 million litres of water a day in 2005/06.
STW has been allowed to increase bills by 15.2% in return for more investment.
In July Thames Water and Severn Trent were singled out by water regulator Ofwat as the worst offenders for water leaks during 2005/06.
Severn Trent has about eight million customers in three million homes and businesses across England and Wales.
On Tuesday it said it expected to complete the hive-off of its High Wycombe-based waste management business Biffa by 9 October.
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