tpz.htm

 
 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


 
FORM N-Q
 
 
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY
 




Investment Company Act file number 811-22106



Tortoise Power and Energy Infrastructure Fund, Inc.
(Exact name of registrant as specified in charter)



11550 Ash Street, Suite 300, Leawood, KS 66211
(Address of principal executive offices) (Zip code)



David J. Schulte
11550 Ash Street, Suite 300, Leawood, KS 66211
(Name and address of agent for service)



913-981-1020
Registrant's telephone number, including area code



Date of fiscal year end: November 30


Date of reporting period:  August 31, 2012
 
 
 
 
 
Item 1. Schedule of Investments.

 
Tortoise Power and Energy Infrastructure Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
August 31, 2012
  
Corporate Bonds - 69.7% (1)
    Principal Amount/Shares    
Fair Value
  
Local Distribution Pipelines - 8.2% (1)
            
United States - 8.2% (1)
            
CenterPoint Energy, Inc., 6.500%, 05/01/2018
   $ 4,000,000     $ 4,818,272  
NiSource Finance Corp., 6.400%, 03/15/2018
     3,500,000       4,189,108  
Source Gas, LLC, 5.900%, 04/01/2017 (2)
     5,770,000       6,166,884  
                15,174,264  
Natural Gas/Natural Gas Liquids Pipelines - 20.9% (1)
                
Canada - 3.5% (1)
                
TransCanada Pipelines Limited, 6.350%, 05/15/2067
     6,000,000       6,379,302  
United States - 17.4% (1)
                
El Paso Corp., 6.500%, 09/15/2020
     5,000,000       5,680,975  
EQT Corp., 6.500%, 04/01/2018
     2,000,000       2,308,164  
EQT Corp., 8.125%, 06/01/2019
     2,000,000       2,409,068  
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020 (2)
     1,500,000       1,731,449  
Midcontinent Express Pipeline LLC, 6.700%, 09/15/2019 (2)
     6,000,000       6,254,568  
NGPL PipeCo LLC, 9.625%, 06/01/2019 (2)
     4,000,000       4,420,000  
Southern Star Central Corp., 6.750%, 03/01/2016
     2,745,000       2,793,038  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016 (2)
     2,000,000       2,214,340  
Southern Union Co., 7.600%, 02/01/2024
     3,500,000       4,331,043  
                38,521,947  
Natural Gas Gathering/Processing - 6.0% (1)
                
United States - 6.0% (1)
                
DCP Midstream LLC, 9.750%, 03/15/2019 (2)
     5,000,000       6,433,310  
Enogex LLC, 6.250%, 03/15/2020 (2)
     4,000,000       4,521,020  
                10,954,330  
Oil and Gas Exploration and Production - 4.9% (1)
                
United States - 4.9% (1)
                
Chesapeake Energy Corp., 7.250%, 12/15/2018
     3,000,000       3,142,500  
Concho Resources, Inc., 5.500%, 04/01/2023
     1,000,000       1,035,000  
Encore Acquisition Co., 9.500%, 05/01/2016
     1,500,000       1,635,000  
Everest Acquisition LLC, 9.375%, 05/01/2020 (2)
     3,000,000       3,262,500  
                9,075,000  
Oilfield Services - 3.8% (1)
                
United States - 3.8% (1)
                
FTS International, Inc., 7.125%, 11/15/2018 (2)
     3,000,000       3,097,500  
Pride International, Inc., 8.500%, 06/15/2019
     3,000,000       3,930,975  
                7,028,475  
Power/Utility - 24.1% (1)
                
United States - 24.1% (1)
                
CMS Energy Corp., 8.750%, 06/15/2019
     5,185,000       6,629,230  
Dominion Resources, Inc., 8.375%, 06/15/2064 (3)
     183,000       5,219,160  
Duquesne Light Holdings, Inc., 6.400%, 09/15/2020 (2)
     3,000,000       3,465,105  
Duquesne Light Holdings, Inc., 5.900%, 12/01/2021 (2)
     2,000,000       2,255,964  
FPL Group Capital, Inc., 6.650%, 06/15/2067
     1,029,000       1,092,026  
Integrys Energy Group, Inc., 6.110%, 12/01/2066
     3,750,000       3,904,687  
IPALCO Enterprises, Inc., 7.250%, 04/01/2016 (2)
     4,000,000       4,480,000  
NRG Energy, Inc., 8.500%, 06/15/2019
     6,000,000       6,420,000  
NV Energy, Inc., 6.250%, 11/15/2020
     1,000,000       1,154,868  
PPL Capital Funding, Inc., 6.700%, 03/30/2067
     6,000,000       6,157,500  
Wisconsin Energy Corp., 6.250%, 05/15/2067
     3,450,000       3,652,687  
 
               44,431,227  
Refining - 1.8% (1)
                
United States - 1.8% (1)
                
Holly Corp., 9.875%, 06/15/2017
     3,000,000       3,292,500  
                   
Total Corporate Bonds (Cost $115,603,446)
             128,477,743  
                   
Master Limited Partnerships and Related Companies - 48.5% (1)
                
Crude/Refined Products Pipelines - 27.0% (1)
                
United States - 27.0% (1)
                
Buckeye Partners, L.P.
     54,000       2,668,680  
Enbridge Energy Management, L.L.C. (4)
     504,666       15,710,250  
Holly Energy Partners, L.P.
     47,600       3,205,860  
Kinder Morgan Management, LLC (4) (5)
     228,001       16,899,460  
Magellan Midstream Partners, L.P.
     26,700       2,215,299  
NuStar Energy L.P.
     52,200       2,647,584  
Plains All American Pipeline, L.P.
     30,600       2,647,818  
Sunoco Logistics Partners L.P.
     79,443       3,706,016  
 
               49,700,967  
Natural Gas/Natural Gas Liquids Pipelines - 12.4% (1)
                
United States - 12.4% (1)
                
Energy Transfer Equity, L.P.
     27,809       1,222,206  
Energy Transfer Partners, L.P.
     107,700       4,600,944  
Enterprise Products Partners L.P.
     127,600       6,813,840  
ONEOK Partners, L.P.
     117,600       6,682,032  
Regency Energy Partners, L.P.
     71,800       1,661,452  
Williams Partners, L.P.
     36,287       1,871,684  
                22,852,158  
Natural Gas Gathering/Processing - 8.0% (1)
                
United States - 8.0% (1)
                
Copano Energy, L.L.C.
     93,200       2,860,308  
DCP Midstream Partners, LP
     85,200       3,675,528  
MarkWest Energy Partners, L.P.
     56,700       3,010,770  
Targa Resources Partners L.P.
     127,100       5,150,092  
                14,696,698  
Propane Distribution - 1.1% (1)
                
United States - 1.1% (1)
                
Inergy, L.P.
     97,700       2,106,412  
                   
Total Master Limited Partnerships and Related Companies (Cost $45,801,539)
             89,356,235  
                   
Short-Term Investment - 0.1% (1)
                
United States Investment Company - 0.1% (1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.16% (6) (Cost $113,092)
     113,092       113,092  
                   
Total Investments - 118.3% (1) (Cost $161,518,077)
             217,947,070  
Long-Term Debt Obligations - (10.9%) (1)
             (20,000,000 )
Interest Rate Swap Contracts - (0.5%) (1)
                
$26,000,000 notional - unrealized depreciation
             (928,068 )
Other Assets and Liabilities - (6.9%) (1)
             (12,811,006 )
Total Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 184,207,996  
                   
                   
(1)
Calculated as a percentage of net assets applicable to common stockholders.
          
(2)
Restricted securities have been fair valued in accordance with procedures approved by the Board of Directors and have
  
 
a total fair value of $48,302,640, which represents 26.2% of net assets.
  
(3)
Security has characteristics that are similar to corporate bonds although it trades in a manner similar to an equity investment.
  
 
The security has a quoted price in an active market and is classified as a Level 1 investment within the fair value hierarchy.
  
(4)
Security distributions are paid-in-kind.
                
(5)
A portion of the security is segregated as collateral for the unrealized depreciation of interest rate swap contracts of $928,068.
  
(6)
Rate indicated is the current yield as of August 31, 2012.
                

 
 
 

Various inputs are used in determining the value of the Company’s investments.  These inputs are summarized in the three broad levels listed below:
   
    Level 1 – quoted prices in active markets for identical investments
    Level 2 – other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.)
    Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following table provides the fair value measurements of applicable Company assets and liabilities by level within the fair value hierarchy as of August 31, 2012.  These assets and liabilities are measured on a recurring basis.

 
Fair Value at
              
Description
August 31,
2012
  
Level 1
  
Level 2
  
Level 3
  
Assets
                
Debt Securities:
                
Corporate Bonds(a)
 $ 128,477,743   $ 5,219,160   $ 123,258,583   $ -  
Equity Securities:
                        
Master Limited
 Partnerships and
 Related Companies(a)
   89,356,235     89,356,235     -     -  
 Other:
                        
Short-Term Investment(b)
   113,092     113,092     -     -  
Total Assets
 $ 217,947,070   $ 94,688,487   $ 123,258,583   $ -  
Liabilities
                        
Interest Rate Swap Contracts
 $ 928,068   $ -   $ 928,068   $ -  

(a)  
All other industry classifications are identified in the Schedule of Investments.
(b)  
Short-term investment is a sweep investment for cash balances in the Company at August 31, 2012.

Valuation Techniques
In general, and where applicable, the Company uses readily available market quotations based upon the last updated sales price from the principal market to determine fair value.  This pricing methodology applies to the Company’s Level 1 investments. 

Some debt securities are fair valued using a market value obtained from an approved pricing service which utilizes a pricing matrix based upon yield data for securities with similar characteristics or from a direct written broker-dealer quotation from a dealer who has made a market in the security.  This pricing methodology applies to the Company’s Level 2 assets.

Interest rate swap contracts are valued by using industry-accepted models which discount the estimated future cash flows based on a forward rate curve and the stated terms of the interest rate swap agreement by using interest rates currently available in the market, or based on dealer quotations, if available, which applies to the Company’s Level 2 liabilities.

The Company utilizes the beginning of reporting period method for determining transfers between levels.  There were no transfers between levels for the period from December 1, 2011 through August 31, 2012.
 
Certain of the Company’s investments are restricted and are valued as determined in accordance with procedures established by the Board of Directors, as more fully described in Note 2.  The table below shows the principal amount, acquisition date(s), acquisition cost, fair value and the percent of net assets which the securities comprise at August 31, 2012.
Investment Security
Principal Amount
Acquisition Date(s)
Acquisition Cost
  
Fair Value
  
Fair Value as Percent of Net Assets
  
DCP Midstream LLC, 9.750%, 03/15/2019
 $ 5,000,000
08/07/09-08/17/12
 $ 6,052,370   $ 6,433,310     3.5 %
Duquesne Light Holdings, Inc., 6.400%, 09/15/2020
   3,000,000
11/30/11
   3,180,330     3,465,105     1.9  
Duquesne Light Holdings, Inc., 5.900%, 12/01/2021
   2,000,000
11/18/11-12/05/11
   2,074,420     2,255,964     1.2  
Enogex LLC, 6.250%, 03/15/2020
   4,000,000
02/26/10-04/22/10
   4,118,593     4,521,020     2.5  
Everest Acquisition, LLC, 9.375%, 05/01/2020
   3,000,000
04/11/12-08/10/12
   3,105,000     3,262,500     1.8  
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020
   1,500,000
07/08/10-01/04/11
   1,551,220     1,731,449     0.9  
FTS International, Inc., 7.125%, 11/15/2018
   3,000,000
12/22/11
   3,157,500     3,097,500     1.7  
IPALCO Enterprises, Inc., 7.250%, 04/01/2016
   4,000,000
11/03/09-01/04/11
   4,165,000     4,480,000     2.4  
Midcontinent Express Pipelines, LLC, 6.700%, 09/15/2019
   6,000,000
09/09/09-03/02/10
   6,055,570     6,254,568     3.4  
NGPL PipeCo LLC, 9.625%, 06/01/2019
   4,000,000
05/23/12
   4,042,500     4,420,000     2.4  
Source Gas, LLC, 5.900%, 04/01/2017
   5,770,000
04/21/10
   5,544,521     6,166,884     3.3  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016
   2,000,000
08/24/09
   1,970,000     2,214,340     1.2  
        $ 45,017,024   $ 48,302,640     26.2 %

As of August 31, 2012, the aggregate cost of securities for federal income tax purposes was $154,855,674.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $63,091,396, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $0 and the net unrealized appreciation was $63,091,396.

 
 
 



Item 2. Controls and Procedures.
 
(a)  
The registrant’s Chief Executive Officer and its Chief Financial Officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b)  
There was no change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
 
Item 3. Exhibits.
 
Separate certifications for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) are filed herewith.
 

 
 
 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


  Tortoise Power and Energy Infrastructure Fund, Inc.  
       
Date:  October 29, 2012
By:
  /s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

  Tortoise Power and Energy Infrastructure Fund, Inc.  
       
Date:  October 29, 2012
By:
  /s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
  Tortoise Power and Energy Infrastructure Fund, Inc.  
       
Date:  October 29, 2012
By:
 /s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer