In a power system, remote measurements are used by a controller to provide damping torque for inter-area oscillations. In this study, the operating conditions that give rise to inter-area oscillations are investigated using Stochastic Subspace Identification (SSI) based modal analysis. In a power system, generators can be grouped based on coherency and the groups can be represented by Virtual Generators (VGs). Damping inter-area oscillations using Virtual Generator based Power System Stabilizer (VG-PSS) that generates a supplementary control signal to the excitation system of one or more synchronous generators is presented. The generator choice for VG-PSS location is determined based on the generator that has maximum controllability on dominant weakly damped inter-area mode(s) in a power system. Modal analysis using SSI and real-time simulation results on the IEEE 68-bus power system are presented to illustrate the effectiveness of VG-PSSs in damping inter-area oscillations. In addition, the effect of time delays encountered as a result of wide area measurements and communications are considered in the studies presented.