Eleven water companies have been fined £150mln in total for missing targets in a range of areas.
Thames Water (£51mln), which supplies London, and Southern Water (£28.3mln) received the heaviest penalties.
Northumbrian Water (£20.3mln), Yorkshire Water (£15.2mln) and South West Water (£13.3m) also received fines of more than £10mln.
Customers of all eleven companies fined will receive a relative rebate or lower bills from their supplier next year.
Ofwat said the penalties reflected missing commitments made during the last price review in 2019.
David Black, chief executive of Ofwat for England and Wales, said: "When it comes to delivering for their customers, too many water companies are falling short, and we are requiring them to return around £150m to their customers.
"We expect companies to improve their performance every year, where they fail to do so we will hold them to account."
Warren Buckley, customer experience director at Thames Water, said it was "determined to do better".
He added: "Our aim is to always deliver brilliant customer service. It's one of the biggest priorities of our plan to turn around our performance."
Some companies, though, will be allowed to increase costs next year after meeting their targets.