This paper aims to investigate the stability of the pumped storage power plant (PSPP) with dual units sharing one pipeline (DUSOP) and the method of suppressing the ultra-low frequency oscillation (ULFO) characteristics. Firstly, four nonlinear models of pumped storage regulation system (PSRS) with DUSOP are established under the design scenarios of no surge tank, upstream surge tank (UST), downstream surge tank, and upstream and downstream dual surge tanks. Then the stability of the PSRS under different surge tank arrangements (STAs) in the long diversion system design scenarios (LDSDS) is comparatively analyzed. Finally, based on the concept of stability margin, the influence mechanism of the operating points on the ULFO characteristics is investigated in the LDSDS with UST, and the influence of the governor parameters, hydrodynamic parameters, and mechanical parameters on the damping ratio and frequency of the system is also analyzed. The results show that among STAs, the design scheme of arranging the UST is more reasonable for PSPP with LDSDS from the comprehensive consideration of the economy of the project and the stability of the system. For PSPP with UST, on the line of equal stability margin, increasing the proportional gain, reducing the unit inertia time constant, reducing the water flow inertia time constant, and appropriately increasing the area of the surge tank can increase the frequency and reduce the amplitude, which is conducive to the suppression of ULFO. In the stability domain range, increasing the proportional gain increases the frequency and the system stability increases and then decreases. Increasing the integral gain decreases the frequency and then increases the system stability. At the same time, the frequency of the unit can be changed by adjusting the parameters of the system to avoid resonance between the frequency of the unit and the frequency of the power grid and to ensure the stability and safety of the unit operation.