The prosecutor had pushed for the municipality to pay SEK 6 million for having been badly prepared, according to news agency TT.
However Östersund had defended itself, saying that knowledge about parasites in water was generally low in Sweden, and that it would not have been possible to predict its spreading.
The awyer, Magdalena Persson, who represented the municipality said it could not be blamed, since there are no rules that detail exactly what safety barriers should be in place.
This was the first time in Sweden that the parasite spread via the water supply. Residents were forced to boil their drinking water for three months.