Powercor had pleaded guilty to more than 100 charges for failing to manage risks and hazards to its electricity network, and a further charge for its role in a bushfire at Glenmore, west of Melbourne, in February 2023.
The blaze scorched about 185 hectares of land, destroying sheds, fences and farming equipment.
Energy Safe Victoria chief executive Leanne Hughson said Powercor had neglected its duty to minimise the hazards and risks of its electricity network.
"Victoria is one of the most bushfire-prone areas in the world and electricity companies have a duty to prioritise public safety and minimise fire risks," Ms Hughson said in a statement.
The charges related to more than 4800 failures to inspect encroaching vegetation in bushfire risk areas, 140 failures to cut back vegetation Powercor knew was too close to its powerlines and one charge in relation to the Glenmore fire.
"The length of un-inspected lines was roughly the distance from Melbourne to Sydney – that's an inexcusable failure and unacceptable risk to a lot of people's safety," Ms Hughson said.
"As the Glenmore fire showed, neglecting even one span of electric line can have dire consequences."
Powercor accepted the sentence and that it had not met community expectations.
"Over recent years, we have increased our investment to improve how we manage vegetation near our powerlines," a spokesman said in a statement.
This includes using laser-equipped helicopters to inspect its network and provide data to inform cutting programs.
"We are on track to inspecting all our powerlines by the middle of this year and have a record number of vegetation contractors engaged in cutting," the spokesman said.
"During 2023 we cut more than 500,000 trees and shrubs growing near more than 50,000 powerline spans (the distance between two poles)."
In sentencing, Magistrate Amina Bhai noted Powercor's early guilty plea but rejected its claim the offending was at the lower end of the scale.
She said it was not the first time Powercor infrastructure had caused a bushfire, and the distributor has previously been prosecuted for failing to clear vegetation near powerlines after fires in Rochester, Strathmerton, and Port Campbell in 2018.
In an April hearing, the court was told Powercor had scrapped plans to trim vegetation below its lines 10 days before the fire, despite a year-old recommendation by one of its own inspectors.
The maximum possible fine for the offending was more than $3.8 million.
In sentencing submissions to the court, prosecutor Andrew Woods had described the offending as "very serious" and said any fine should not be seen as simply the cost of doing business.
