The problem of stabilizing a bulk power system by modulating controllable active loads is investigated. With today's advances in power distribution and home automation, fibre optic communications and networking, such a scheme for improving the reliability of bulk power supply is increasingly attractive. After developing a generic model for active load-modulation studies, time domain modal analysis is applied to a three-machine-nine-bus system in order to assess quantitatively its responsiveness with respect to controller location and observed response signals. This structural analysis shows that proportional control is unsatisfactory and may artificially restrict the economic benefits of active-load modulation. By contrast, using the bus voltage and frequency as input signals, combined with suitable dynamic compensators, yields a fully decentralized, two-loop load stabilizer able to add damping to all grid modes in the sample power system. Finally, placement and sizing issues are considered and preliminary observations based on transient stability studies are made.