Drinking water had three times higher chlorine levels than pool
Thousands of homes were supplied with water that had almost three times more chlorine than a swimming pool, it has been revealed.
In total, 3,700 properties were left without safe water for 26 hours after 8.8mg per litre of chlorine was detected at a Derbyshire reservoir.
The Drinking Water Inspectorate (DWI) cautioned Severn Trent Water for "missed opportunities" in 2016.
The company admitted the offence and said it had "let our customers down".
Typically, drinking water has 0.5mg of chlorine per litre, compared to pools that have up to 3mg.
Investigations found the scare across Derbyshire and Leicestershire was caused by failures at the chlorine dosing unit at Castle Donington Service Reservoir.
The DWI said although it was a "very unusual event... this serious event was avoidable".
"There were a number of missed opportunities to identify and rectify the problem before the event," it said.
The company admitted the offence of supplying water unfit for human consumption.
"We agree with the DWI's decision and accept that on this occasion we let our customers down," it said.
"While the levels of chlorine recorded in customers' taps were higher than normal, they did not reach levels that were likely to cause adverse health effects."
The water firm added that affected customers had been compensated and apologised for the inconvenience caused.
At the time, the company's website crashed because of the demand for information.
Staff handed out water bottles at Sainsbury's in Swadlincote, Derbyshire, and Tesco in Ashby-de-la-Zouch, Leicestershire.
Residents said Swadlincote was "solid with traffic and there was no water on the shelves".
Some of those affected had criticised the way the situation had been handled and said bottles should have been distributed in more places besides the two supermarkets.