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, 2014
 
 
 
 
Item 1. Schedule of Investments.
 
Tortoise Power and Energy Infrastructure Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
August 31, 2014
  
       Principal Amount/Shares    
Fair Value
  
Corporate Bonds - 60.8% (1)
            
Crude/Refined Products Pipelines - 4.7% (1)
            
Canada - 2.1% (1)
            
Gibson Energy Inc., 6.750%, 07/15/2021 (2)
   $ 4,500,000     $ 4,860,000  
United States - 2.6% (1)
                
SemGroup LP, 7.500%, 06/15/2021
     5,450,000       5,886,000  
                10,746,000  
Local Distribution Pipelines - 6.5% (1)
                
United States - 6.5% (1)
                
CenterPoint Energy, Inc., 6.500%, 05/01/2018 (3)
     4,000,000       4,642,168  
NiSource Finance Corp., 6.400%, 03/15/2018 (3)
     3,500,000       4,032,329  
Source Gas, LLC, 5.900%, 04/01/2017 (2) (3)
     5,770,000       6,058,500  
                14,732,997  
Natural Gas/Natural Gas Liquids Pipelines - 16.9% (1)
                
Canada - 2.7% (1)
                
TransCanada Pipelines Limited, 6.350%, 05/15/2067
     6,000,000       6,247,500  
United States - 14.2% (1)
                
El Paso Corp., 6.500%, 09/15/2020 (3)
     6,000,000       6,987,600  
EQT Corp., 6.500%, 04/01/2018
     2,000,000       2,299,086  
EQT Corp., 8.125%, 06/01/2019
     2,000,000       2,481,422  
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020 (2) (3)
     1,500,000       1,694,205  
Midcontinent Express Pipeline LLC, 6.700%, 09/15/2019 (2)
     6,000,000       6,795,000  
Ruby Pipeline, LLC, 6.000%, 04/01/2022 (2) (3)
     1,500,000       1,707,106  
Southern Star Central Corp., 5.125%, 07/15/2022 (2)
     3,000,000       3,037,500  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016 (2) (3)
     2,000,000       2,128,688  
Williams Companies, Inc., 7.875%, 09/01/2021
     4,000,000       4,927,724  
                38,305,831  
                   
Natural Gas Gathering/Processing - 4.8% (1)
                
United States - 4.8% (1)
                
DCP Midstream LLC, 9.750%, 03/15/2019 (2) (3)
     5,000,000       6,470,555  
Enogex LLC, 6.250%, 03/15/2020 (2) (3)
     4,000,000       4,397,048  
                10,867,603  
Oil and Gas Exploration and Production - 5.7% (1)
                
United States - 5.7% (1)
                
Carrizo Oil & Gas, Inc., 7.500%, 09/15/2020
     2,000,000       2,140,000  
Chesapeake Energy Corp., 7.250%, 12/15/2018 (3)
     3,500,000       4,068,750  
Concho Resources, Inc., 5.500%, 04/01/2023
     2,000,000       2,135,000  
Denbury Resources Inc., 6.375%, 08/15/2021
     1,000,000       1,067,500  
EP Energy / EP Finance Inc., 9.375%, 05/01/2020 (3)
     3,000,000       3,382,500  
                12,793,750  
Oilfield Services - 1.7% (1)
                
United States - 1.7% (1)
                
Pride International, Inc., 8.500%, 06/15/2019
     3,000,000       3,783,228  
                   
Power/Utility - 20.5% (1)
                
United States - 20.5% (1)
                
CMS Energy Corp., 8.750%, 06/15/2019
     5,185,000       6,663,835  
Dominion Resources, Inc., 8.375%, 06/15/2064 (4)
     183,000       4,721,400  
Duquesne Light Holdings, Inc., 6.400%, 09/15/2020 (2)
     3,000,000       3,550,161  
Duquesne Light Holdings, Inc., 5.900%, 12/01/2021 (2)
     2,000,000       2,351,466  
FPL Group Capital, Inc., 6.650%, 06/15/2067
     1,029,000       1,052,153  
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       4,310,000  
NRG Energy, Inc., 6.250%, 07/15/2022 (2)
     6,000,000       6,285,000  
NRG Yield LLC, 5.375%, 08/15/2024 (2)
     2,500,000       2,587,500  
NV Energy, Inc., 6.250%, 11/15/2020 (3)
     1,000,000       1,188,831  
PPL Capital Funding, Inc., 6.700%, 03/30/2067 (3)
     6,000,000       6,119,340  
Wisconsin Energy Corp., 6.250%, 05/15/2067
     3,450,000       3,583,687  
 
               46,257,123  
                   
Total Corporate Bonds (Cost $124,546,162)
             137,486,532  
                   
Master Limited Partnerships and Related Companies - 46.4% (1)
                
                   
Crude/Refined Products Pipelines - 21.6% (1)
                
United States - 21.6% (1)
                
Buckeye Partners, L.P. (3)
     54,000       4,266,000  
Enbridge Energy Management, L.L.C. (3) (5) (6)
     553,030       19,809,528  
Genesis Energy, L.P.
     11,800       657,260  
Holly Energy Partners, L.P. (3)
     56,100       2,035,869  
Magellan Midstream Partners, L.P. (3)
     52,090       4,371,914  
NuStar Energy L.P. (3)
     31,200       2,062,008  
Oiltanking Partners, L.P.
     18,800       922,892  
Phillips 66 Partners LP
     15,500       1,147,000  
Plains All American Pipeline, L.P. (3)
     72,959       4,372,433  
Sunoco Logistics Partners L.P. (3)
     152,786       7,559,851  
Tesoro Logistics LP
     13,400       941,752  
Valero Energy Partners LP
     13,794       735,358  
 
               48,881,865  
                   
Natural Gas/Natural Gas Liquids Pipelines - 17.5% (1)
                
United States - 17.5% (1)
                
Energy Transfer Equity, L.P. (3)
     33,384       2,024,739  
Energy Transfer Partners, L.P. (3)
     101,200       5,813,940  
Enterprise Products Partners L.P. (3)
     190,024       7,720,675  
Kinder Morgan Management, LLC (3) (5)
     191,881       18,750,627  
ONEOK Partners, L.P. (3)
     61,203       3,637,294  
Regency Energy Partners, L.P. (3)
     47,552       1,568,265  
                39,515,540  
                   
Natural Gas Gathering/Processing - 7.3% (1)
                
United States - 7.3% (1)
                
Access Midstream Partners, L.P.
     10,700       688,545  
DCP Midstream Partners, LP (3)
     71,827       4,063,972  
EnLink Midstream Partners, L.P.
     22,400       694,176  
MarkWest Energy Partners, L.P. (3)
     56,700       4,520,691  
Targa Resources Partners L.P. (3)
     86,500       6,435,600  
                16,402,984  
                   
Total Master Limited Partnerships and Related Companies (Cost $35,768,523)
             104,800,389  
                   
Common Stock - 9.3% (1)
                
Natural Gas/Natural Gas Liquids Pipelines - 2.6% (1)
                
United States - 2.6% (1)
                
ONEOK, Inc.
     19,100       1,340,820  
Spectra Energy Corp.
     45,500       1,895,530  
Williams Companies, Inc.
     43,103       2,562,042  
                5,798,392  
Power/Utility - 6.7% (1)
                
United Kingdom - 1.6% (1)
                
Abengoa Yield plc
     91,707       3,678,368  
United States - 5.1% (1)
                
NextEra Energy Partners, LP
     79,127       2,778,149  
NRG Yield, Inc.
     94,610       5,145,838  
TerraForm Power, Inc.
     117,822       3,680,759  
                15,283,114  
                   
Total Common Stock (Cost $15,938,925)
             21,081,506  
                   
Short-Term Investment - 0.1% (1)
                
United States Investment Company - 0.1% (1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.05% (7) (Cost $122,891)
     122,891       122,891  
                   
Total Investments - 116.6% (1) (Cost $176,376,501)
             263,491,318  
Interest Rate Swap Contracts - (0.1%) (1)
                
$26,000,000 notional - unrealized depreciation
             (234,446 )
Other Assets and Liabilities - (16.5%) (1)
             (37,232,132 )
Total Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 226,024,740  
                   
                   
(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 $56,232,729, which represents 24.9% 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)
A portion of the security is segregated as collateral for the unrealized depreciation of interest rate swap contracts of $234,446.
  
(7)
Rate indicated is the current yield as of August 31, 2014.
                

 
 
 

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, 2014.  These assets are measured on a recurring basis.

   
Fair Value at
                    
Description
  
August 31,
2014
    
Level 1
    
Level 2
    
Level 3
  
Assets
                        
Debt Securities:
                        
    Corporate Bonds(a)
   $ 137,486,532     $ 4,721,400     $ 132,765,132     $ -  
Equity Securities:
    Common Stock(a)
     21,081,506       21,081,506       -       -  
    Master Limited Partnerships and Related Companies(a)
     104,800,389       104,800,389       -       -  
 Other:
                                
Short-Term Investment(b)
     122,891       122,891       -       -  
Total Assets
   $ 263,491,318     $ 130,726,186     $ 132,765,132     $ -  
Liabilities
                                
Interest Rate Swap Contracts
   $ 234,446     $ -     $ 234,446     $ -  

(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, 2014.

The Company did not hold any Level 3 securities during the period from December 1, 2013 through August 31, 2014.  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, 2013 through August 31, 2014.

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.
 
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, 2014.  Each of the securities in the table below are eligible for resale under Rule 144A under the Securities Act of 1933.

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     $ 6,470,555       2.9 %
Duquesne Light Holdings, Inc., 6.400%, 09/15/2020
     3,000,000  
11/30/11
     3,180,330       3,550,161       1.6  
Duquesne Light Holdings, Inc., 5.900%, 12/01/2021
     2,000,000  
11/18/11-12/05/11
     2,074,420       2,351,466       1.0  
Enogex LLC, 6.250%, 03/15/2020
     4,000,000  
02/26/10-04/22/10
     4,118,593       4,397,048       1.9  
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020
     1,500,000  
07/08/10-01/04/11
     1,551,220       1,694,205       0.8  
Gibson Energy Inc., 6.750%, 07/15/2021
     4,500,000  
06/26/13-07/01/13
     4,459,760       4,860,000       2.2  
IPALCO Enterprises, Inc., 7.250%, 04/01/2016
     4,000,000  
11/03/09-01/04/11
     4,165,000       4,310,000       1.9  
Midcontinent Express Pipeline, LLC, 6.700%, 09/15/2019
     6,000,000  
09/09/09-03/02/10
     6,055,570       6,795,000       3.0  
NRG Energy, Inc., 6.250%, 07/15/2022
     6,000,000  
02/11/14
     6,135,000       6,285,000       2.8  
NRG Yield LLC, 5.375%, 08/15/2024
     2,500,000  
07/31/14
     2,530,000       2,587,500       1.1  
Ruby Pipeline, LLC, 6.000%, 04/01/2022
     1,500,000  
09/17/12
     1,616,250       1,707,106       0.8  
Source Gas, LLC, 5.900%, 04/01/2017
     5,770,000  
04/21/10
     5,544,521       6,058,500       2.7  
Southern Star Central Corp., 5.125%, 07/15/2022
     3,000,000  
06/17/14
     3,041,250       3,037,500       1.3  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016
     2,000,000  
08/24/09
     1,970,000       2,128,688       0.9  
              $ 52,494,284     $ 56,232,729       24.9 %

As of August 31, 2014, the aggregate cost of securities for federal income tax purposes was $169,225,632.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $94,481,721, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $216,035 and the net unrealized appreciation was $94,265,686.

 
 
 
 


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 30, 2014
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 30, 2014
By:
  /s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
  Tortoise Power and Energy Infrastructure Fund, Inc.  
       
Date: October 30, 2014
By:
 /s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer