I think i would rule that it does.
Level 1 Spell = 10 Gallons = 1 Supply.
Level 2 Spell = 20 Gallons = 2 Supply.
Obviously doesn't speak to RAI but in the absence of that verbiage in the upcast language, that's how I'd go.
Edit: Since it evens out with Create Food and Water at lvl 3, and gets...