Conwy and Denbighshire councils are scrapping plans to merge highways departments.
The local authorities said the move would not save money despite the the Welsh government pushing for more councils to work together.
Conwy and Denbighshire share a head of highways, and last year claimed they had saved £300,000 by working together on road networks.
But research shows the cheapest way of merging would cost at least £781,000 over three years, with another option predicted to cost more than £1.3m.
The councils also claim the move would not mean a better service for people in the two counties.
Mike Priestley, the cabinet member for highways at Conwy county borough, told the BBC: "Putting two services together costs money, and at this stage - bearing in mind the financial climate that we're in - it just didn't stack up.
He added that the councils were "not saying it's never going to happen", but "it's just not right at this time".
Conwy and Denbighshire said they wanted to look at more low-key ways of working together.
David Smith, the councillor in charge of Denbighshire's highways, said: "We haven't jumped into bed with Conwy, we're not getting married, but we're still friends and we're still talking together and we still have collaborative projects.
"I, as lead member for highways, was not going to put us into a situation where it was going to cost us more, and we'd get a poorer service - end of story really."
He added that the councils were "still looking for areas where we can work together".
