TORONTO - Claims that home hydro bills will rise another $5 a month because of higher guaranteed rates of return for power utilities came under fire Friday from the board behind the rate increase.

The Ontario Energy Board issued a statement saying the 9.85 per cent rate of return it gave to electricity utilities earlier this year would work out to no more than $1.27 more on a monthly bill, and could even lead to slight decreases on some bills.

"When the board set the policy, the impact was estimated to be no more than a dollar a month for the majority of residential customers," said the OEB statement.

The board said the return on equity number is only a forecast.

"This cannot be confused with actual rate of return," said the OEB. "Utilities do not typically earn the allowed return."

The actual return on equity for Ontario utilities was much lower in recent years: 3.3 per cent last year and 3.5 per cent in 2008, even though the allowed rate was 8.01 per cent, added the regulator.

The NDP said Friday it was standing by its position that the new rate of return of nearly 10 per cent will add another $240 million in annual profits for utilities that will be put onto ratepayers' bills to the tune of $5 a month.

"Bills will go up even higher because of a guaranteed increase in profit for the companies, absolutely," said NDP energy critic Peter Tabuns.

"They're lowballing it when they say the companies won't recover the maximum that they can recover. Companies are in business to maximize their profits."

The New Democrats also released new figures Friday suggesting the new return on equity rate will mean another $55.4 million in profits for natural gas companies Union Gas and Enbridge Gas.

The OEB said the natural gas companies won't have the new rate of return incorporated into their revenues until 2013.

The NDP's figures triggered an intense debate during question period Thursday, with Premier Dalton McGuinty ducking all questions about increasing profits for local utilities but agreeing electricity bills will continue to increase to pay for modernizing the system.

Speaking in Ottawa on Friday, McGuinty again avoided questions on the rate of return for utilities, but said he wanted Ontario residents to understand why their electricity bills were rising.

"Electricity bills are going up because we're investing billions of dollars in new transmission and new generation," said McGuinty.

"I'm being straight with the people of Ontario. We have to invest in modernizing (the) electricity system."

Both opposition parties have been hammering the Liberal government over soaring hydro bills since the fall session started two weeks ago, sensing an issue that will continue to irk voters every month until next year's provincial election.

The Progressive Conservatives and NDP say they're swamped with calls, letters and emails from people fuming about soaring electricity prices. Liberal green energy policies and July's addition of the HST to energy prices are to blame, they say.

The decision to install smart meters in people's homes and force them into more expensive time-of-use pricing for electricity -- often at rates nearly double what they were paying 24 hours a day until recently -- has left people afraid to open their hydro bills, said the Tories.

"The Green Energy Act has -- and we warned that this would happen -- increased the chances of people's bills being doubled and they can't afford it," Opposition critic Lisa MacLeod said Friday.

"What we hear from our constituents across the province is enough is enough; they can't continue to afford Dalton McGuinty's rate increases. Times are tough and he has to be accountable for that."

Tabuns said it was no surprise the OEB was disputing the NDP's numbers.

"The government has a real loss of credibility on the energy field, the electricity file, and yeah they're fighting back," he said.