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The high reactive power demand by the induction motor load during fault condition due to reduced bus voltages may cause a generator to behave like a voltage source behind the synchronous reactance and its terminal voltage reduces leading to the possibility of a voltage collapse scenario. For reliability of these systems, and in an attempt to reduce system oscillations, Power System Stabilizers (PSS) have used to add damping by controlling the excitation system. Studies on a SMIB and those using static loads have shown that a well-tuned PSS using a Fuzzy Logic Controller (FLPSS) can effectively improve power system dynamic stability. This paper investigates the impact of the FLPSS in maintaining voltage stability in a system with induction motor loads. A large induction motor is introduced as a load in a multi machine system, and the impact of the FLPSS are investigated by introducing a temporary three phase fault. For comparison the FLPSS is compared to other PSS found in literature. Results indicate that the FLPSS may lead the generator to lose its capability to maintain constant voltage and hence lead to the stalling of the induction motor load soon after the fault is cleared.