That's a good point - I also completely excluded sewer prices, which are actually considerably higher than water prices.
Warning: no data, just intuition, in the rest of this comment.
I'm a bit confused by that, actually, since California is in a significant drought and there is a lot of pressure to get people to cut back on washing their cars and watering their lawns. I would imagine that, in a residential setting, roughly 100% of water consumed for purposes besides the external use that we're trying to reduce then goes into the sewer.
So why don't we just increase water prices and cut sewer prices equivalently? You'd expect the average consumer's bill to go up only in proportion with the amount of externally used water that they "waste". One potential complication might be for houses with septic tanks, but those are probably fairly uncommon in the area served by SFPUC. Perhaps, as a utility, they're constrained to charge relative to their actual cost in those areas.
Edit: retric - thanks, that makes sense. I'm a renter here, so I don't pay a water bill (except indirectly via rent).