Harper to back Lower Churchill plan

The federal government has agreed to back a hydroelectric project in Labrador, CBC News has learned, just as Conservative Leader Stephen Harper prepares for an election campaign visit in St. John's.

Sources say the federal Conservatives will back the $6.2-billion Lower Churchill project, although it is not yet clear how that support will be provided or what it will entail.

Harper heads to Newfoundland and Labrador on Thursday, as the party works on engineering a turnaround in the province, where then Premier Danny Williams waged the controversial but effective "anything but Conservative" in 2008.

Newfoundland and Labrador as well as Nova Scotia have been seeking federal loan guarantees, as well as support through an infrastructure program.

It is not known whether Harper will use the campaign stop for the May 2 vote to make an announcement regarding the plan to generate power at Muskrat Falls, in central Labrador.

Multiple sources tell CBC News, though, that the federal and provincial governments have reached a deal on the terms of a loan guarantee.

Dunderdale called a sellout

Meanwhile, Newfoundland and Labrador's Liberal leader accused Premier Kathy Dunderdale of selling out her principles, during a spirited argument preceding Harper's campaign stop.

"She sold her soul, Mr. Speaker, that is what is happening in this province," Yvonne Jones said during a feisty exchange in the house of assembly, accusing Dunderdale of co-operating with the federal Conservative campaign in return for getting a deal on the Lower Churchill hydro megaproject.

Jones said Dunderdale and the provincial Progressive Conservatives have abandoned the principles of the "anything but Conservative" campaign.

"She sold her soul to a government [that] a few years ago she couldn't trust, and now today she can't answer the questions on behalf of the people of the province," Jones told the legislature.

Dunderdale fired back, saying she had no regrets for taking part in the campaign.

"We will hold the federal government's feet to the fire on files that are extremely important to the people of Newfoundland and Labrador," said Dunderdale.  

Support not unconditional: premier

Moreover, Dunderdale indicated the federal Conservatives should not count on unconditional support for their campaign, and suggested that the "anything but Conservative" tactic might even be revived.

"I did it in 2006, Mr. Speaker, in a very public way, and I will do it again if it becomes necessary," she said.

"I do not mind naming people when they fail the people of this province, but I will also acknowledge them when they do right by us."

Earlier in the day, the outgoing chair of Nalcor Energy, Newfoundland and Labrador's Crown-owned energy corporation, added new fuel to speculation of a new agreement.

John Ottenheimer resigned Wednesday in order to seek the Conservative nomination in the southern Newfoundland riding of Random-Burin-St. George's, currently held by Liberal Judy Foote.

"That is critical," Ottenheimer said of federal support for the project.

"I can speak first-hand to the fact that an announcement of that nature, or similar to that, is very important to this province."