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The meters monitor water use remotely and are expected to enable faster detection of leaks.
"Smart water meters help prevent customers paying for water that they’re not using and will mean less water is wasted across the city in future," a Dunedin City Council spokesman said.
"The technology allows an alert to be sent within 24 hours of a leak occurring, meaning leaks can be identified and repaired more quickly."
Installation of meters has started, but most will be installed from next month.
Previously, customers would receive a bill, and with it details of a potential leak, monthly or quarterly, the spokesman said.
The meters would enable automated monthly billing.
ADR has the contract for the installation.