Could be many things (tax structure, location, actual costs, etc.)...probably best to ask your water company to explain, rather than rely on our speculations.

I'd say you're probably being gouged. That's what happens under a sole source supply situation. In my town the meter, including town installation, cost $100. I paid another $150 to a plumber to isolate the external spigots and sprinkler supply line to accept a second meter.

In our area the city determines the cost of the meter. They are over serveral hundred dollars and the cost is added to the water bill (about 25 dollars per month, with no end date)

I doubt it's gouging. we're likely talking about a utility and not a private company, so looking for ways to use a monopoly to increase profits usually isn't the modivating factor here. But I have seen water utilities use these punitive meter rates when they realize they are serving a rapidly growing community and the existing system isn't forcasted to handle all of the expected growth.

Additionally, water works utilities usually don't differentiate between a primary meter and a secondary meter (except in sewer costs when the 2nd meter isn't tied to plumbing leading to sewer).

And even if the 2nd meter wasn't that expensive, it still might not be cost effective to have a 2nd meter. In our case, the water works charge something like a $10 minimum per month. That $10 covers something like the first 2000 gallons and then your water bill starts going up past $10 once you exceed 2000 gallons for the month. So that means I would be paying that $10/month in Nov, Dec, Jan, Feb for a 2nd meter that is effectively shut off. When I ran the numbers on the amount of irrigation water I use, the savings I would obtain by not paying sewer charges for the irrigation water, and the cost of a "cheap" meter and minumum monthly charges, it was going to take something like 7 years for me to break even.