The prosecution stems from a release of suspended solids and iron into the River Test from its Fullerton wastewater treatment works near Stockbridge in March 2023.
The firm also failed to tell the Environment Agency when it spotted the problem, or that faulty equipment had caused it.
On July 14, 2026, Southern Water admitted two charges at Medway Magistrates’ Court.
Simon Moody of the Environment Agency said: “Chalk streams like the River Test are precious, natural resources.
“But they are also fragile and this incident came to light thanks to the close eye we keep on their health.
“Southern Water’s safeguards which should have protected this chalk stream failed one by one.
“That’s unacceptable. Chalk streams should be gin clear.
“Thorough maintenance and tested process would have prevented this.”
On March 13, 2023, routine Environment Agency checks detected dark particles in the River Test.
Upstream samples showed the pollution getting worse and traced it back to Southern Water’s Fullerton site, nearly four miles away.
Staff at the works said only one of the four tanks meant to remove sludge and scum was working.
One tank had been waiting for repairs for more than a year, and pump faults feeding the sand filter beds were logged days earlier.
Tests found more than triple the permitted level of suspended solids, plus excessive iron.
It turned the water red and breached environmental rules.
The Environment Agency said salmon born in the River Test are genetically unique, making them less resilient and in need of clean, well-oxygenated water.
Southern Water also admitted it missed at least two chances to alert the Environment Agency.
The agency said the River Test’s salmon are especially vulnerable to pollution because they need clean, oxygen-rich water.
Samples taken 11 days after the Environment Agency stepped in showed water quality had improved sharply.