The Quebec government warns it will fight tooth and nail against the federal government's plan to subsidize an Atlantic link to transport electricity from Newfoundland to Nova Scotia.

Prime Minister Stephen Harper was expected to unveil a financial package to subsidize the expected $7.4-billion project that would allow Newfoundland and Labrador to bypass Quebec transmission lines. Rather, the province would funnel the electricity produced at Muskrat Falls through to Cape Breton for export to the United States.

"Quebeckers have always paid for their own electricity. This creates unfair competition. It is a unilateral decision by the federal government," said Quebec's Minister of Intergovernmental Affairs Alexandre Cloutier.

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The Parti Québécois government said it will consider taking legal action to stop Ottawa from injecting public funds into the project. Mr. Cloutier acknowledged however that the province's legal case may be "thin" but that all efforts need to be considered.

"Our margin of manoeuvre is thin. We will look at the entire project and make sure that all legal arguments will have been evaluated…We are not excluding any means including recourse to litigation," Mr. Cloutier said.

The National Assembly adopted a motion on Friday condemning the federal government's action. A similar motion was unanimously adopted last year but to no avail.

The PQ government argued that Ottawa's decision was another intrusion in an area of provincial jurisdiction and that use of Quebec taxpayer dollars to promote the project was uncalled for.

"Our money will be used against us to subsidize electricity from Newfoundland against the electricity Quebec produces," said Natural Resources Minister Martine Ouellet. "We are open to co-operate with Newfoundland on projects. But what is happening here is the use of Quebec money against our economic, strategic and energy interests. That is unacceptable."

Quebec was also in a boundary dispute with Newfoundland and Labrador involving the Old Harry oil deposit in the Gulf of St. Lawrence. However Mr. Cloutier insisted that Ottawa shouldn't blame Newfoundland for the conflict over the Muskrat Falls project.

"If Newfoundland wants to lobby Ottawa that is their choice…But never will we accept that the federal government encroach on our jurisdictions," Mr. Cloutier said. "It is an example of the malfunction of Canadian federalism."