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)



Terry Matlack
Diane Bono
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, 2013
 
 
 
 
Item 1. Schedule of Investments.

Tortoise Power and Energy Infrastructure Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
August 31, 2013
  
Common Stock - 1.9% (1)
    Principal Amount/Shares    
Fair Value
  
Power/Utility - 1.9% (1)
            
United States - 1.9% (1)
            
NRG Yield, Inc. (Cost $3,455,755)
     132,000     $ 3,677,520  
                   
Corporate Bonds - 69.4% (1)
                
Crude/Refined Products Pipelines - 4.2% (1)
                
Canada - 2.4% (1)
                
Gibson Energy Inc., 6.750%, 07/15/2021 (2)
   $ 4,500,000       4,601,250  
United States - 1.8% (1)
                
SemGroup LP, 7.500%, 06/15/2021 (2)
     3,450,000       3,510,375  
                8,111,625  
Local Distribution Pipelines - 7.7% (1)
                
United States - 7.7% (1)
                
CenterPoint Energy, Inc., 6.500%, 05/01/2018 (3)
     4,000,000       4,732,204  
NiSource Finance Corp., 6.400%, 03/15/2018 (3)
     3,500,000       4,040,743  
Source Gas, LLC, 5.900%, 04/01/2017 (2) (3)
     5,770,000       6,068,719  
                14,841,666  
Natural Gas/Natural Gas Liquids Pipelines - 19.8% (1)
                
Canada - 3.2% (1)
                
TransCanada Pipelines Limited, 6.350%, 05/15/2067
     6,000,000       6,240,000  
United States - 16.6% (1)
                
El Paso Corp., 6.500%, 09/15/2020 (3)
     6,000,000       6,328,170  
EQT Corp., 6.500%, 04/01/2018
     2,000,000       2,239,978  
EQT Corp., 8.125%, 06/01/2019
     2,000,000       2,404,632  
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020 (2) (3)
     1,500,000       1,643,515  
Midcontinent Express Pipeline LLC, 6.700%, 09/15/2019 (2)
     6,000,000       6,110,406  
NGPL PipeCo LLC, 9.625%, 06/01/2019 (2)
     2,000,000       2,060,000  
Ruby Pipeline, LLC, 6.000%, 04/01/2022 (2) (3)
     1,500,000       1,603,933  
Southern Star Central Corp., 6.750%, 03/01/2016
     2,745,000       2,779,313  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016 (2) (3)
     2,000,000       2,164,396  
Williams Companies, Inc., 7.875%, 09/01/2021
     4,000,000       4,755,828  
                38,330,171  
                   
Natural Gas Gathering/Processing - 5.5% (1)
                
United States - 5.5% (1)
                
DCP Midstream LLC, 9.750%, 03/15/2019 (2) (3)
     5,000,000       6,334,275  
Enogex LLC, 6.250%, 03/15/2020 (2) (3)
     4,000,000       4,298,716  
                10,632,991  
Oil and Gas Exploration and Production - 7.5% (1)
                
United States - 7.5% (1)
                
Carrizo Oil & Gas, Inc., 7.500%, 09/15/2020
     2,000,000       2,110,000  
Chesapeake Energy Corp., 7.250%, 12/15/2018 (3)
     3,500,000       3,963,750  
Concho Resources, Inc., 5.500%, 04/01/2023
     2,000,000       1,940,000  
Denbury Resources Inc., 6.375%, 08/15/2021
     1,000,000       1,047,500  
EP Energy / EP Finance Inc., 9.375%, 05/01/2020 (3)
     3,000,000       3,300,000  
Plains Exploration & Production Co., 6.500%, 11/15/2020
     2,000,000       2,129,072  
                14,490,322  
Oilfield Services - 2.0% (1)
                
United States - 2.0% (1)
                
Pride International, Inc., 8.500%, 06/15/2019
     3,000,000       3,793,062  
                   
Power/Utility - 22.7% (1)
                
United States - 22.7% (1)
                
CMS Energy Corp., 8.750%, 06/15/2019
     5,185,000       6,635,639  
Dominion Resources, Inc., 8.375%, 06/15/2064 (4)
     183,000       4,836,690  
Duquesne Light Holdings, Inc., 6.400%, 09/15/2020 (2)
     3,000,000       3,437,448  
Duquesne Light Holdings, Inc., 5.900%, 12/01/2021 (2)
     2,000,000       2,227,348  
FPL Group Capital, Inc., 6.650%, 06/15/2067
     1,029,000       1,083,022  
Integrys Energy Group, Inc., 6.110%, 12/01/2066 (3)
     3,750,000       3,843,750  
IPALCO Enterprises, Inc., 7.250%, 04/01/2016 (2)
     4,000,000       4,370,000  
NRG Energy, Inc., 8.500%, 06/15/2019
     6,000,000       6,465,000  
NV Energy, Inc., 6.250%, 11/15/2020 (3)
     1,000,000       1,163,206  
PPL Capital Funding, Inc., 6.700%, 03/30/2067 (3)
     6,000,000       6,210,000  
Wisconsin Energy Corp., 6.250%, 05/15/2067
     3,450,000       3,579,375  
 
               43,851,478  
                   
Total Corporate Bonds (Cost $124,052,052)
             134,051,315  
                   
Master Limited Partnerships and Related Companies - 46.6% (1)
                
Crude/Refined Products Pipelines - 18.3% (1)
                
United States - 18.3% (1)
                
Buckeye Partners, L.P. (3)
     54,000       3,780,000  
Enbridge Energy Management, L.L.C. (3) (5)
     522,211       15,661,095  
Holly Energy Partners, L.P. (3)
     86,200       3,062,686  
Magellan Midstream Partners, L.P. (3)
     53,400       2,897,484  
NuStar Energy L.P. (3)
     31,200       1,301,352  
Phillips 66 Partners LP
     15,500       476,935  
Plains All American Pipeline, L.P. (3)
     61,200       3,094,272  
Sunoco Logistics Partners L.P. (3)
     79,443       5,103,418  
 
               35,377,242  
                   
Natural Gas/Natural Gas Liquids Pipelines - 21.5% (1)
                
United States - 21.5% (1)
                
Energy Transfer Equity, L.P. (3)
     27,809       1,788,953  
Energy Transfer Partners, L.P. (3)
     107,700       5,521,779  
Enterprise Products Partners L.P. (3)
     111,000       6,595,620  
Inergy Midstream, L.P. (3)
     42,210       980,960  
Kinder Morgan Management, LLC (3) (5)
     235,469       18,799,858  
ONEOK Partners, L.P. (3)
     82,400       4,086,216  
Regency Energy Partners, L.P. (3)
     71,800       1,940,754  
Williams Partners, L.P. (3)
     36,287       1,790,038  
                41,504,178  
                   
Natural Gas Gathering/Processing - 6.8% (1)
                
United States - 6.8% (1)
                
DCP Midstream Partners, LP (3)
     85,200       4,083,636  
MarkWest Energy Partners, L.P. (3)
     56,700       3,786,993  
Targa Resources Partners L.P. (3)
     109,200       5,335,512  
                13,206,141  
                   
Total Master Limited Partnerships and Related Companies (Cost $40,078,916)
       90,087,561  
                   
Short-Term Investment - 0.1% (1)
                
United States Investment Company - 0.1% (1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.05% (6) (Cost $121,055)
     121,055       121,055  
                   
Total Investments - 118.0% (1) (Cost $167,707,778)
             227,937,451  
Interest Rate Swap Contracts - 0.0% (1)
                
$26,000,000 notional - unrealized appreciation
             47,426  
Other Assets and Liabilities - (18.0%) (1)
             (34,855,072 )
Total Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 193,129,805  
                   
                   
(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 $48,430,381, which represents 25.1% of net assets.
  
(3)
All or a portion of the security is segregated as collateral for the margin borrowing facility. 
  
(4)
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.
  
(5)
Security distributions are paid-in-kind.
                
(6)
Rate indicated is the current yield as of August 31, 2013.
                

 
 
 

 
Various inputs are used in determining the fair value of the Company’s financial instruments.  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 by level within the fair value hierarchy as of August 31, 2013.  These assets are measured on a recurring basis.

 
Fair Value at
              
Description
August 31,
2013
  
Level 1
  
Level 2
  
Level 3
  
Assets
                
Debt Securities:
                
Corporate Bonds(a)
 $ 134,051,315   $ 4,836,690   $ 129,214,625   $ -  
Equity Securities:
                        
Common Stock(a)
   3,677,520     3,677,520     -     -  
Master Limited Partnerships and
Related Companies(a)
   90,087,561     90,087,561     -     -  
Other Securities:
                        
Short-Term Investment(b)
   121,055     121,055     -     -  
Interest Rate Swap Contracts
   47,426     -     47,426     -  
Total Assets
 $ 227,984,877   $ 98,722,826   $ 129,262,051   $ -  
                         

(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, 2013.

The Company did not hold any Level 3 securities during the period from December 1, 2012 through August 31, 2013.

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, 2012 through August 31, 2013.
 
Certain of the Company’s investments are restricted and are valued as determined in accordance with procedures established by the Board of Directors.  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, 2013.

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 $ 6,334,275   3.3 %
Duquesne Light Holdings, Inc., 6.400%, 09/15/2020
   3,000,000
11/30/11
   3,180,330   3,437,448   1.8  
Duquesne Light Holdings, Inc., 5.900%, 12/01/2021
   2,000,000
11/18/11-12/05/11
   2,074,420   2,227,348   1.2  
Enogex LLC, 6.250%, 03/15/2020
   4,000,000
02/26/10-04/22/10
   4,118,593   4,298,716   2.2  
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020
   1,500,000
07/08/10-01/04/11
   1,551,220   1,643,515   0.8  
Gibson Energy Inc., 6.750%, 07/15/2021
   4,500,000
06/26/13-07/01/13
   4,459,760   4,601,250   2.4  
IPALCO Enterprises, Inc., 7.250%, 04/01/2016
   4,000,000
11/03/09-01/04/11
   4,165,000   4,370,000   2.3  
Midcontinent Express Pipelines, LLC, 6.700%, 09/15/2019
   6,000,000
09/09/09-03/02/10
   6,055,570   6,110,406   3.2  
NGPL PipeCo LLC, 9.625%, 06/01/2019
   2,000,000
05/23/12
   2,042,500   2,060,000   1.1  
Ruby Pipeline, LLC, 6.000%, 04/01/2022
   1,500,000
09/17/12
   1,616,250   1,603,933   0.8  
SemGroup LP, 7.500%, 06/15/2021
   3,450,000
06/10/13-07/01/13
   3,499,563   3,510,375   1.8  
Source Gas, LLC, 5.900%, 04/01/2017
   5,770,000
04/21/10
   5,544,521   6,068,719   3.1  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016
   2,000,000
08/24/09
   1,970,000   2,164,396   1.1  
        $ 46,330,097 $ 48,430,381   25.1 %


As of August 31, 2013, the aggregate cost of securities for federal income tax purposes was $160,803,104.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $67,592,029, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $457,682 and the net unrealized appreciation was $67,134,347.
 
 
 


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 24, 2013
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 24, 2013
By:
  /s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
  Tortoise Power and Energy Infrastructure Fund, Inc.  
       
Date: October 24, 2013
By:
 /s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer