Anglian Water has also been ordered to pay landowner Roy Hart £9,500 to cover his legal costs, WaterTechOnline reports.
The fine is believed to be one of the biggest imposed against a water company as a result of a pollution incident, the news service said.
Hart stepped in ahead of the Environment Agency by taking private legal action when he saw sewage in the River Crouch near his home in Battlesbridge, Essex, in October.
The company admitted causing pollution at a hearing before magistrates last month and Judge Zoe Smith levied the fine. Anglian Water said the sewage discharge had been caused by an “unfortunate and unforeseeable mechanical failure” at a nearby treatment plant.
A spokeswoman for the firm says the company “deeply regretted” the discharge and is committed to the environment and its improvement.
The Environment Agency said it fully intends to prosecute but is waiting until its investigators have gathered all available evidence.
An Agency spokesman said the organisation provided evidence supporting Hart’s case and has tried to persuade him to let it take over the prosecution. “The outcome is obviously a good result for Hart and we are pleased with the fine,” said the spokesman. “However, we believe we could have mounted a stronger case and we would urge people to leave prosecutions to us in these situations.”