A characteristic locus method developed from the celebrated generalized Nyquist criterion is proposed for power systems small-disturbance stability analysis and control design in this paper. First, a loop transformation is introduced to re-formulate the familiar Heffron-Phillips model. The new model has a feedback control structure so that the generalized Nyquist criterion is applicable when concluding the stability of the closed-loop system. Subsequently, the relationship between generalized Nyquist curve and characteristic loci is utilized to acquire a new stability margin. The effectiveness of the stability margin is demonstrated using Cassini Oval Theorem. An analytical expression of the stability margin is derived as well. It is convenient to quantify the effects of control loops on stability margin by applying this expression. Moreover, the analytical relationship between stability margin and frequency responses of controllers provides information for the design of the controllers. The utility of the proposed method is confirmed through case studies.