Defective pumps at Margate pumping station in Kent led to several discharges of untreated sewage between January and June 2011.
The repeated failure of the pumps meant Southern Water was unable to pump the sewage to Weatherlees Works for treatment, and instead discharged it into the sea off Margate.
Canterbury Crown Court also heard that the firm, which serves Kent, Sussex, Hampshire and the Isle of Wight, failed to tell the EA or the local food authority about the discharges.
Last month the company pleaded guilty to breaching its strict environmental permit and causing avoidable releases of untreated sewage to enter the sea, the EA said.
Following sentencing, Andy Stamp, the EA's environment officer, said: "We would rather work with companies to assist them to comply with their environmental permits and minimise the risk to the environment.
"When, however, this does not happen there should be consequences.
"We take these types of incidents very seriously and will do everything within our powers to safeguard the environment and people affected, and that includes bringing those who harm the environment to account for their actions."
Another £400,000 is earmarked and plans for another pumping station are being drawn up, the firm added. It said it has supported the local tourist industry with a series of promotional projects.
Southern Water director Geoff Loader said that, although the company had failed to operate within its environmental permit, Margate beaches had continued to meet European quality standards.
He said: "Importantly, the majority of beaches in the Margate area continue to have water quality sufficient to meet the Blue Flag standards and all meet European standards.
"Therefore, although we have breached our permit, we have not caused any deterioration in the water quality of Margate's beaches and, overall, our current treatment system has delivered improvements leading to Blue Flag water quality.
"However, failures with our plant are not acceptable.
"We fully understand the importance of water quality to the reputation of Thanet as a leading tourist resort in the UK and we will always work to protect and enhance that."