The expansion of San Francisco’s CleanPowerSF program could be scaled back after state energy regulators on Thursday decided to raise the fees customers pay when joining the program.

The California Public Utilities Commission voted unanimously to adjust an arcane formula that determines the so-called exit fees customers pay when they leave investor-owned utilities like Pacific Gas & Electric Co. in favor of government-run power programs like CleanPowerSF.

For the average residential CleanPowerSF customer, the adjustment will increase their monthly bills by roughly 8 percent — or $5.08. The program’s 108,000 participants, including business customers, will together pay $40 million more per year following the state PUC’s decision, about 25 percent of CleanPowerSF’s annual revenues. The San Francisco Public Utilities Commission plans to take steps to reduce what customers actually pay.

Across PG&E’s entire service territory, energy bills for residential participants in government-run programs will rise about 1.68 percent, according to the state PUC.

That’s raised serious concerns among officials at the growing number of government-run energy providers in California and their proponents, many of whom see programs like CleanPowerSF and East Bay Community Energy as greener and less-expensive alternatives compared to what utility companies provide.

If programs like CleanPowerSF become more expensive, they could lose their competitive edge over utility companies like PG&E, threatening their ability to attract more customers, supply more energy and grow.

But as more people flock to government-run energy alternatives, PG&E and other utilities say the rate increases are essential to ensure that costs don’t fall unfairly upon customers who choose to stay with the power companies or have no energy alternatives.

Lynsey Paulo, a PG&E spokeswoman, said the utility was “pleased” with the commission’s vote, “which goes further to ensuring that customer choice does not increase costs for PG&E ... customers.”

Barbara Hale, the San Francisco Public Utilities Commission’s assistant general manager for power operations, said the agency would look at ways to keep CleanPowerSF’s customers from bearing the brunt of the increases, which will begin Jan. 1. The San Francisco PUC’s internal policy is to offer CleanPowerSF at an equivalent price to PG&E.

“We’re going to take this information and see what we can do to adjust our program costs and rates to protect customers from an increase like that,” Hale said.

Scaling back CleanPowerSF’s operations could imperil the program’s planned enrollment of 260,000 new customers next year. The San Francisco PUC is gradually enrolling the city in CleanPowerSF automatically, but customers can choose to opt out.

“The concern around this cost will slow everything down,” she said. “The only thing we can do is lower our operating costs to try to absorb the increases ... to protect our customers,” she said.

In a statement, San Francisco Mayor London Breed said she was “incredibly disappointed by the CPUC’s decision to increase fees for clean energy customers. At a time when international reports are highlighting the dire consequences of climate change, the CPUC is sending the exact wrong message about confronting this critical issue,” calling renewable energy “the only path forward for our city.”

Breed, along with Oakland Mayor Libby Schaaf and San Jose Mayor Sam Liccardo, repeatedly urged the state PUC to consider tinkering with the rate-setting formula in ways that wouldn’t impede the expansion of government energy programs and, by extension, their ability to meet their clean-energy goals.

Oakland Councilman Dan Kalb, who sits on Easy Bay Community Energy’s board of directors, said the rate increases would “make it more challenging for us to produce local clean energy projects. The unintended consequences of this is problematic for those (government-run programs) that really want to emphasize clean, local development in the near future. I’m worried about it.”

The permanent fee that shows up on consumers’ bills when they switch to a government-run program like CleanPowerSF is meant to offset the costs that utilities incurred to purchase energy contracts and for other investments. PG&E, for example, has spent billions of dollars buying and generating renewable energy since the early 2000s.

But the mushrooming of government-run programs has steadily siphoned customers away from investor-owned utilities, saddling a diminishing pool of PG&E customers with the costs of those prior investments — investments that the state PUC approved.

In 2017, the growth of government-run energy programs shifted $180 million in costs to remaining PG&E customers, according to Paulo, the PG&E spokeswoman. Without Thursday’s adjustment by the state PUC, that number would grow to $500 million by 2020.

California law requires the state PUC to ensure that people who can sign up for a government-run program don’t place a financial burden on those who stay with investor-owned utilities like PG&E out of choice or necessity.

State PUC Commissioner Carla Peterman insisted that the changes to the rate-setting formula wouldn’t impede the growth of government-run energy programs.

“They can decide how they want to structure their business, but we just can’t be in a position where a group of customers is unfairly paying to allow that additional attainment,” she said.

Dominic Fracassa is a San Francisco Chronicle staff writer. Email: dfracassa@sfchronicle.com Twitter: @dominicfracassa