United Utilities Group PLC (LON:UU.) is facing prosecution on claims it supplied water unfit for human consumption from its Franklaw treatment works in August 2015.
The water contamination left residents in Blackpool, Chorley, Fylde, Preston, South Ribble and Wyre unable to drink tap water for more than three weeks.
The cryptosporidium bug, which can cause diarrhoea and abdominal cramps, was found at Franklaw outside Preston. Homeowners were advised to boil their drinking water after the microbial parasite was discovered.
United Utilities is to be prosecuted by Drinking Water Inspectorate (DWI), which said the outbreak affected about 700,000 people.
The company has been accused of failing to properly disinfect supplies and of not ensuring an adequate treatment process.
An initial hearing will take place at Preston Magistrates Court on 30 June.
In a statement, United Utilities said it has taken “a full and open role with DWI during their investigation and complied with all requests for information”.
“It would be inappropriate to comment further now until after the case has been concluded,” it added.
The news comes at the same time as Tesco was fined £8mln by the Environment Agency after a fuel leak from one its petrol stations in the UK polluted a river. More than 20,000 litres of petrol escaped from a tank over a 29-hour period in 2014 and contaminated River Irwell in Haslingden, east Lancashire.