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Newfoundland and Labrador Premier Kathy Dunderdale hugs cabinet minister Susan Sullivan after announceing her resignation in St. John's on Jan. 22, 2014.

GREG LOCKE/REUTERS

Just before Christmas, Newfoundland and Labrador Premier Kathy Dunderdale confided to a friend that she felt mentally and physically worn down. She was looking forward to a Florida vacation with her grandchildren.

But that was short-lived. On Wednesday, she announced she is quitting as Progressive Conservative Premier, returning to St. John's early from her holiday to meet with her caucus before making her decision public.

"Just as you know when it is time to step up, you also know when it is time to step back, and that time for me is now," she said, surrounded by her caucus members.

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Ms. Dunderdale gave no reason for her sudden decision only 2 1/2 years after she became the first elected female premier of the province and more than a year before the next election.

In her brief remarks on Wednesday, she also did not address the polls that showed the unpopularity of her government and her leadership. Nor did she talk about the discontent among caucus members, underlined by Tory MHA Paul Lane's defection earlier this week to the opposition Liberals.

In fact, news of his floor-crossing and harsh criticism of her leadership interrupted her holiday. Mr. Lane was not talking on Wednesday, and Liberal spokeswoman Carla Foote told The Globe and Mail the party did not "see the connection between the decision by Paul Lane to cross the floor and the Premier in resigning."

A source close to Ms. Dunderdale, 61, said a combination of factors led to her decision. Negotiating the $7.7-billion Muskrat Falls hydroelectric project proved taxing. There was opposition in the province, and she had to fight with the Harper government over a $1-billion loan guarantee, but won it in the end.

The experience, the source said, was bruising. Consensus was growing, too, within her party that she should not lead the campaign for the 2015 election.

Ms. Dunderdale was dogged by the reputation of her predecessor, the extremely popular Danny Williams. She and Mr. Williams were not getting along, and the source said he would let her ministers know what he thought about the job she was doing.

The rift was on display on Wednesday, when Mr. Williams issued a response to Ms. Dunderdale's resignation. In one sentence, he thanked her for "many years of service to the province" and then devoted the rest of his statement to congratulating Finance Minister Tom Marshall in glowing terms for stepping up as interim premier.

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Ms. Dunderdale's communication skills were not strong, especially compared to those of Mr. Williams. She often appeared to be on the defensive and was heavily criticized for her delay in reacting to recent rolling blackouts, insisting it was not a crisis while people were without power for days.

Her performance was contrasted with that of Ontario Premier Kathleen Wynne, who was very present handling the ice storm crisis in her province.

Ms. Dunderdale's resignation – she officially steps down on Friday – highlights the rough style of politics in the province and raises questions about the brand of the Tories, who have been in power since 2003.

Mr. Marshall is considered the elder statesmen of the PC caucus and a good fit because he is not expected to contest the leadership. Others in the caucus are being touted as potential contenders, including cabinet ministers Darin King, Derrick Dalley and Paul Davis.

But some senior party members think a new leader should come from the outside to show true reform.

"I think it would be healthy for our party to seriously contemplate renewal from the outside, which would bring with it new ideas, new policies and an opportunity to reach out … and recruit new candidates," said Leo Power, a Newfoundland businessman and a senior party fundraiser.

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The media are speculating that Tim Powers, a consultant in Ottawa but a native son (he is related to John Crosbie, the former Mulroney cabinet minister and lieutenant-governor) is considering running. And there are constant rumours former defence chief of staff Rick Hillier will throw his hat in the ring.

A date for a leadership vote has not been set yet.

Financially, the party is doing well, Mr. Power said, but not in public opinion. The Liberals recently elected a new leader, Dwight Ball, and are ahead in the polls.

Still, Mr. Power believes Ms. Dunderdale leaves the province in good shape. He notes the Muskrat Falls project as her legacy and the importance of the Comprehensive European Trade Agreement.

"[CETA] eliminates punitive tariffs on seafood products, and this represents a huge positive for our fishery and on opportunity to strengthen a vital industry throughout rural Newfoundland and Labrador," he said.

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