Incorporation of load dynamics in stability studies is necessary nowadays, especially due to the increased use of induction machines in both consumption and generation. This paper investigates power system small-signal stability, considering induction machines as dynamic elements. Linear coefficients are proposed that are convenient for both quantitative and qualitative single machine-infinite bus studies. These coefficients are expanded into matrices in the case of multimachine systems, where the off-diagonal elements represent the interaction between machines. Modal interaction between induction machines, as well as between induction and synchronous machines, is investigated. It is shown that a large proportion of induction machines in a realistic power system significantly affects the interarea electromechanical mode and, consequently, the power system stabilizer design.