Cheshire West & Chester Council has refused planning permission to the two companies bidding for the 25-year private finance initiative waste contract.
The council's strategic planning committee decided against the schemes for Viridor's mechanical and biological treatment plant at Griffiths Road in Northwich and the waste treatment plant in Wincham proposed by Resource Recovery Solutions, a partnership between United Utilities and Interserve.
Both companies are involved in a joint Cheshire West & Chester and Cheshire East Councils waste disposal procurement under the Government's PFI and the preferred bidder was expected to have been announced in October.
However, Viridor was turned down by seven votes to two because of "member concern it would result in over capacity of such plants and the impacts of increased use of Northwich roads".
The council added that Resource Recovery Solutions was refused unanimously because "the site was not allocated in the Waste Local Plan, overprovision of waste capacity and detrimental effect on the local community in particular local roads such as the A559".
A spokesman for Cheshire West & Chester Council said: "We will consider the determinations of the Strategic Planning Committee and its possible implications for the Procurement which aims to provide sustainable technologies to drastically reduce the thousands of tonnes of household waste being sent to landfill each year."
Viridor proposed to produce a mechanical and biological treatment plant at Lostock Gralam, which would recover limited recyclable materials from household waste and use the remainder to produce a solid recoverable fuel. The fuel would then have been used at Ineos Chlor power station in Runcorn.
Symon Grasby, Viridor's planning manager, said: "Viridor is clearly disappointed with the decision made by Cheshire West and Chester Council to refuse planning permission for the facility at Lostock. The proposed plans underwent significant consultation efforts and were specifically designed to meet the needs of the Cheshire authorities.
"Viridor will await further notice of the reasons for the planning refusal and will reflect on this decision and our options in due course."
Last December, Resource Recovery Solutions submitted its planning application to build a waste treatment plant in New Cheshire Business Park on Wincham Lane. The company planned to use gasification technology to generate renewable energy from left-over and non-recycled waste.
The £847m waste management contract is dependant on £100m of PFI credits from central government and based on projected alternative landfill disposal costs.