Conservative MPs from St. John's are trying to douse a political fire that Newfoundland and Labrador Premier Danny Williams says could ultimately cost them their seats.

Williams said Prime Minister Stephen Harper — with whom Williams met on Saturday — would not reiterate a written pledge from this winter's federal election, in which he ensured that non-renewable energy resources would not be part of the equalization formula.

Loyola Hearn said he would rather collaborate than argue with Newfoundland and Labrador Premier Danny Williams.
(CBC)

Williams fears that a new equalization formula would wipe out gains from the revised Atlantic Accord, which exempts offshore oil revenues from federal clawbacks.

Williams said Canadians should expect "a big goose egg for the Conservatives" in Newfoundland and Labrador in the next election if Harper does not back up his written promise. The pledge was made in a Jan. 4 letter sent to Williams.

But federal Fisheries Minister Loyola Hearn, who represents St. John's South-Mount Pearl, said the dispute has more angry words than genuine policy differences.

"I think at this time the best thing we can all do is park the rhetoric, get on with the job, and if it comes to the point where we do have problems, then let's roll up our sleeves collectively and deal with them," Hearn said.

"But, for God's sake, let's not go out creating problems, and I think that's exactly what's happening in this case."

Norm Doyle, the backbench MP for St. John's East, said Newfoundland and Labrador has nothing to worry about.

"The Atlantic Accord will not be adjusted. It's written in stone," Doyle said.

"It's signed, sealed, delivered, and it's something that the province need not have any fear [of]."

No decisions yet: Flaherty

The issue was brought to the floor of the House of Commons Tuesday, as Liberal critics accused Newfoundland Tories of failing to protect their constituents' interests.

Federal Finance Minister Jim Flaherty repeated the government's view that the entire equalization formula is under review.

"Decisions have not been taken yet. The difference is that we have a privileged approach on this side of the House, unlike the previous government's ad hoc [approach]," Flaherty said.

Some Conservatives have criticized the revised Atlantic Accord as a "side deal," even though Harper backed it at the time and it reaffirmed an agreement reached in 1985 with the Progressive Conservative government of Brian Mulroney.

Jim Feehan, an economist at Memorial University, said a new equalization formula could spell trouble for Newfoundland and Labrador, even without touching the Atlantic Accord itself.

A cap on the amount of equalization that any province receives, for instance, would have a dramatic effect.

"If the cap kicks in — and the cap is based upon how much revenue you're getting in total — then you have substantial losses in equalization," Feehan told CBC News.

"We might have close to a dollar-for-dollar clawback of some of our offshore revenues if this cap were implemented."