SECTION 1. Chapter 25A of the General Laws is hereby amended by inserting after section 11I the following section:-

Section 11J. (a) As used in this section, the following words shall, unless the context clearly requires otherwise, have the following meanings:-

"Critical facility", any hospital, police station, fire station, water treatment plant, sewage treatment plant, public shelter or correctional facility, any commercial area of a municipality, a municipal center, as identified by the chief elected official of any municipality, or any other facility or area identified by the department as critical;

"Distributed energy generation", the generation of electricity from a unit with a rating of not more than 65 megawatts on the premises of a retail end user within the transmission and distribution system;

"Microgrid", a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid and that connects and disconnects from such grid to enable it to operate in both grid-connected or island mode.

(b) The department shall establish a microgrid grant and loan pilot program, subject to appropriation, to support local distributed energy generation for critical facilities. The department shall develop and issue a request for proposals from municipalities, electric distribution companies, participating municipal lighting plants and private entities seeking to develop microgrid distributed energy generation, or to repurpose existing distributed energy generation for use with microgrids, to support critical facilities. Any entity eligible to submit a proposal pursuant to this section may collaborate with any other such entity in submitting such proposal.

(c) The department may award grants or loans under the microgrid grant and loan pilot program to municipalities, electric distribution companies, participating municipal lighting plants and private entities. Such grants and loans shall only be used to provide assistance to recipients for the cost of design, engineering services and interconnection infrastructure for any such microgrid. The department may establish any financing mechanism to provide or leverage additional funding to support the development of distributed energy generation and microgrids that is not limited to the cost of interconnection infrastructure.

(e) On or before January 1, 2014, the department shall file a report the clerks of the senate and the house of representatives, the joint committee on telecommunications, utilities and energy and the senate and house committees on ways and means identifying other funding sources necessary to expand the microgrid grant and loan pilot program established pursuant to this section and any legislative changes necessary to access such funding.

(f) The department shall study the methods of providing reliable electric services to critical facilities, taking into consideration the location of such critical facilities. Such study shall evaluate the costs and benefits of such methods, including, but not limited to, the use of microgrids, undergrounding and portable turbine generation, and shall make recommendations identifying the most cost-effective and reliable of such methods. Not later than January 1, 2014, the department shall submit the findings of such study  to the clerks of the senate and the house of representatives, the joint committee on telecommunications, utilities and energy and the senate and house committees on ways and means.