This paper presents a novel approach of using unmanned aerial vehicles (UAVs) for automated meter reading (AMR) applications in rural areas where there are a few consumers scattered across a wide area. Compared to traditional meter reading systems, the use of UAVs for AMR brings several advantages, such as low cost operation, flexibility and online system management. In this paper, the advantages of integrating an Inertial Navigation System (INS) and a Global Positioning System (GPS) receiver for a robust localization and navigation system for automated meter reading applications are investigated. In addition, the results of field tests related to the proposed navigation and localization system, and experimental studies on sensor node lifetime, are given to prove the effectiveness of the proposed system. The proposed system can be used by utility providers to extend or improve their services.