Abstract: The setting condition of surge chamber is a key criterion in primary designs of hydropower stations, and in the case of long conduits it depends on the elasticity of water significantly. This paper describes a simplified water hammer elastic model based on frequency domain characteristics and a mathematical model of operational stability using Laplace transform theory. We derive a surge chamber stability setting criterion by applying simplified elastic water hammer equations and Hurwitz criterion, and analyze the stability limits corresponding to different governor parameters and the dependence of divergent fluctuations on the elasticity of water. An analytical equation of speed fluctuations is derived by identifying the dominant poles of the equation system, and verified by comparison with numerical results, and then it is used in formulation of the setting conditions for different governing qualities. Application of the theoretical procedure to practical cases shows the maximum inertia time constant of water with compressibility in effect as well as the significance of compressibility by comparison with common setting criterions.