This paper presents a method for reliability assessment of the electric grid with distributed generation providing support to the system. Evaluation of customer controlled distributed generation contribution is done for two cases; the first case analyses distributed generation wherein generation units export power to the grid. The second case analyses onsite generation wherein units handle loads at individual customer sites, thus relieving grid congestion. Reliability parameters for the distributed generation systems were obtained from data collected from existing systems that have been in operation for an extended period of time. Calculations are performed on the IEEE-Reliability Test System. The state duration sampling approach using Monte Carlo simulations is employed to evaluate the ability of the system to meet demand requirements. The impact of distributed generation on the utility controlled grid as well as on individual customer reliability is evaluated. The significance of the results obtained is discussed.