He said the matter should be sent back for fresh consideration, in accordance with law, by the CRU's single electricity market (SEM) committee. The SEM is an all-Ireland body that protects consumer interests by promoting effective competition in the marketplace, and includes representatives from the CRU and its Northern Ireland equivalent.

Kilshane and Coolpowra should be given an opportunity to submit any further material as part of the reconsideration, the judge said. A decision on their applications will be given on Monday afternoon, the court was told.

The auction, which is already underway, is conducted to ensure Ireland's future capacity needs can be met. Due to legal challenges, its closing date had been postponed to this Thursday, December 12. Just before the judge gave his decision on Tuesday, the court was told that the auction had been further extended to December 17.

Admission to the auction means a participant can bid in the wholesale marketplace for a licence to provide connections to the national grid in four years time.

Separate challenges were brought by Kilshane Energy Ltd and by Coolpowra Flex Gen Ltd and related firm, Coolpowra Bess Ltd, against the CRU and against EirGrid which manages the national grid, over their refusal to admit them to the auction.

EirGrid had refused the applications and the CRU backed those decisions. Both opposed the High Court challenges. The Minister for Environment, Heritage, and Local Government was joined as a notice party.

In his decision, the judge said among the issues he considered were whether the respondents fettered their discretion and/or failed to exercise their discretion under what is known as the capacity market code. This code provides a legal and regulatory framework for the process.

He also considered whether the process was vitiated by unfairness, whether the respondents took into account relevant or irrelevant considerations, whether the decision was irrational, and whether adequate reasons were provided. He also considered the scope of the review of the EirGrid decision which was carried out by the CRU.

Having considered all the material and submissions to the court over four days last week, he was satisfied to quash the decision and remit it to the CRU. He said he would give a written judgment outlining his reasoning as soon as possible.

In relation to a question raised by Kilshane's counsel Tony McBride, instructed by Dermot McNamara solicitor, about what standard of review the CRU should apply in its reconsideration, the judge directed the CRU should be broader in its approach and should consider the consider the merits of whether the firms should be admitted to the auction.