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, 2015
 
 
 
 
Item 1. Schedule of Investments.
 

Tortoise Power and Energy Infrastructure Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
August 31, 2015
  
       Principal Amount/Shares    
Fair Value
  
Corporate Bonds - 75.8%(1)
            
Crude/Refined Product Pipelines - 5.7%(1)
            
Canada - 2.6%(1)
            
Gibson Energy Inc., 6.750%, 07/15/2021(2)
   $ 4,500,000     $ 4,376,250  
United States - 3.1%(1)
                
SemGroup Corp., 7.500%, 06/15/2021
     5,450,000       5,395,500  
                9,771,750  
Local Distribution Companies - 7.1%(1)
                
United States - 7.1%(1)
                
CenterPoint Energy, Inc., 6.500%, 05/01/2018(3)
     4,000,000       4,461,344  
NiSource Finance Corp., 6.400%, 03/15/2018(3)
     1,393,000       1,547,527  
Source Gas, LLC, 5.900%, 04/01/2017(2)(3)
     5,770,000       6,080,599  
                12,089,470  
Natural Gas/Natural Gas Liquids Pipelines - 23.1%(1)
                
Canada - 3.9%(1)
                
TransCanada Corporation, 5.625%, 05/20/2075
     7,000,000       6,699,000  
United States - 19.2%(1)
                
Columbia Pipeline Group, Inc., 3.300%, 06/01/2020(2)(3)
     2,000,000       1,996,102  
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020(2)(3)
     1,500,000       1,635,999  
Kinder Morgan, Inc., 6.500%, 09/15/2020(3)
     6,000,000       6,620,292  
Midcontinent Express Pipeline LLC, 6.700%, 09/15/2019(2)
     6,000,000       6,240,000  
ONEOK, Inc., 4.250%, 02/01/2022
     4,500,000       3,690,000  
ONEOK, Inc., 7.500%, 09/01/2023
     2,000,000       2,000,000  
Rockies Express Pipeline, LLC, 6.000%, 01/15/2019(2)
     4,000,000       4,000,000  
Ruby Pipeline, LLC, 6.000%, 04/01/2022(2)(3)
     1,500,000       1,615,497  
Southern Star Central Corp., 5.125%, 07/15/2022(2)
     3,000,000       2,925,000  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016(2)(3)
     2,000,000       2,058,136  
                39,480,026  
Natural Gas Gathering/Processing - 4.5%(1)
                
United States - 4.5%(1)
                
DCP Midstream LLC, 9.750%, 03/15/2019(2)(3)
     3,000,000       3,306,525  
The Williams Companies, Inc., 7.875%, 09/01/2021
     4,000,000       4,405,488  
                7,712,013  
Oil and Gas Exploration and Production - 7.9%(1)
                
United States - 7.9%(1)
                
Carrizo Oil & Gas, Inc., 7.500%, 09/15/2020
     2,000,000       1,890,000  
Chesapeake Energy Corporation, 7.250%, 12/15/2018
     1,500,000       1,267,500  
Concho Resources Inc., 5.500%, 04/01/2023
     2,000,000       1,975,820  
EP Energy / EP Finance Inc., 9.375%, 05/01/2020
     3,000,000       2,905,500  
EQT Corporation, 6.500%, 04/01/2018
     2,000,000       2,179,866  
EQT Corporation, 8.125%, 06/01/2019
     2,000,000       2,343,020  
Range Resources Corporation, 5.000%, 03/15/2023
     1,000,000       915,000  
                13,476,706  
Oilfield Services - 1.9%(1)
                
United States - 1.9%(1)
                
Pride International, Inc., 8.500%, 06/15/2019(3)
     3,000,000       3,347,019  
Power/Utility - 25.6%(1)
                
United States - 25.6%(1)
                
The AES Corporation, 5.500%, 04/15/2025
     5,000,000       4,700,000  
CMS Energy Corp., 8.750%, 06/15/2019(3)
     5,185,000       6,362,301  
CMS Energy Corp., 5.050%, 03/15/2022(3)
     2,000,000       2,174,292  
Dominion Resources, Inc., 5.750%, 10/01/2054
     4,000,000       4,128,000  
Duquesne Light Holdings, Inc., 6.400%, 09/15/2020(2)
     3,000,000       3,436,551  
Duquesne Light Holdings, Inc., 5.900%, 12/01/2021(2)
     2,000,000       2,273,024  
Integrys Energy Group, Inc., 6.110%, 12/01/2066(3)
     3,750,000       3,225,000  
NRG Energy, Inc., 6.250%, 07/15/2022
     6,000,000       5,850,000  
NRG Yield Operating LLC, 5.375%, 08/15/2024
     2,500,000       2,406,250  
NV Energy, Inc., 6.250%, 11/15/2020(3)
     1,000,000       1,158,419  
PPL Capital Funding, Inc., 6.700%, 03/30/2067(3)
     6,000,000       5,115,000  
Wisconsin Energy Corp., 6.250%, 05/15/2067(3)
     3,450,000       2,988,562  
 
               43,817,399  
                   
Total Corporate Bonds (Cost $129,237,391)
             129,694,383  
                   
Master Limited Partnerships and Related Companies - 37.9%(1)
                
Crude/Refined Product Pipelines - 22.6%(1)
                
United States - 22.6%(1)
                
Buckeye Partners, L.P.(3)
     46,153       3,250,094  
Enbridge Energy Management, L.L.C.(3)(4)
     405,132       11,404,462  
Genesis Energy, L.P.
     11,800       515,188  
Holly Energy Partners, L.P.
     36,311       1,255,634  
Magellan Midstream Partners, L.P.
     66,991       4,727,555  
MPLX LP
     17,726       879,564  
NuStar Energy L.P.(3)
     20,684       1,079,291  
Phillips 66 Partners LP
     15,500       967,200  
Plains All American Pipeline, L.P.(5)
     152,928       5,514,584  
Shell Midstream Partners, L.P.
     31,927       1,263,351  
Sunoco Logistics Partners L.P.(3)
     137,931       4,666,206  
Tesoro Logistics LP
     44,417       2,345,662  
Valero Energy Partners LP
     13,794       714,943  
 
               38,583,734  
Natural Gas/Natural Gas Liquids Pipelines - 9.9%(1)
                
United States - 9.9%(1)
                
Columbia Pipeline Partners LP
     22,959       455,277  
Energy Transfer Equity, L.P.
     66,768       1,872,842  
Energy Transfer Partners, L.P.(3)
     101,200       4,972,968  
Enterprise Products Partners L.P.
     164,409       4,621,537  
EQT GP Holdings, LP
     5,552       180,551  
EQT Midstream Partners, LP
     24,627       1,915,981  
ONEOK Partners, L.P.
     61,203       1,979,917  
Spectra Energy Partners, LP
     19,446       990,579  
                16,989,652  
Natural Gas Gathering/Processing - 5.4%(1)
                
United States - 5.4%(1)
                
Antero Midstream Partners LP
     22,434       519,572  
DCP Midstream Partners, LP
     52,040       1,467,528  
EnLink Midstream Partners, LP
     22,400       394,912  
MarkWest Energy Partners, L.P.
     56,700       3,196,179  
Targa Resources Partners LP
     86,500       2,611,435  
Western Gas Partners, LP
     18,799       1,105,945  
                9,295,571  
                   
Total Master Limited Partnerships and Related Companies (Cost $36,059,277)
             64,868,957  
                   
Common Stock - 16.4%(1)
                
Natural Gas/Natural Gas Liquids Pipelines - 6.2%(1)
                
United States - 6.2%(1)
                
Kinder Morgan, Inc.(3)
     259,032       8,395,227  
ONEOK, Inc.
     62,777       2,260,600  
                10,655,827  
Power/Utility - 8.3%(1)
                
United Kingdom - 0.6%(1)
                
Abengoa Yield plc
     45,900       1,044,684  
United States - 7.7%(1)
                
8point3 Energy Partners LP
     60,162       893,406  
InfraREIT, Inc.
     184,668       5,203,944  
NextEra Energy Partners, LP
     79,127       2,388,053  
NRG Yield, Inc.
     104,936       1,685,272  
TerraForm Power, Inc.
     136,831       3,078,697  
                14,294,056  
Natural Gas Gathering/Processing - 1.9%(1)
                
United States - 1.9%(1)
                
The Williams Companies, Inc.
     66,513       3,205,927  
                   
Total Common Stock (Cost $25,520,752)
             28,155,810  
                   
Preferred Convertible - 0.7%(1)
                
Oil and Gas Exploration and Production - 0.7%(1)
                
United States - 0.7%(1)
                
Anadarko Petroleum Corporation, 7.500% 06/07/2018 (Cost $1,202,217)
     24,400       1,113,860  
Short-Term Investment - 0.0%(1)
                
United States Investment Company - 0.0%(1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.13%(6) (Cost $32,301)
     32,301       32,301  
                   
Total Investments - 130.8%(1) (Cost $192,051,938)
             223,865,311  
Interest Rate Swap Contracts - (0.2)%(1)
                
$26,000,000 notional - unrealized depreciation
             (364,794 )
Credit Facility Borrowings - (31.8)%(1)
             (54,500,000 ) 
Other Assets and Liabilities - 1.2%(1)
             2,136,338  
Total Net Assets Applicable to Common Stockholders - 100.0%(1)
           $ 171,136,855  
                   
                   
(1)
Calculated as a percentage of net assets applicable to common stockholders.
                
(2)
Restricted securities have been valued in accordance with fair value procedures,
         
 
and have a total fair value of $39,943,683, which represents 23.3% of net assets.
 
(3)
All or a portion of the security is segregated as collateral for the margin borrowing facility. 
          
(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 $364,794.
          
(6)
Rate indicated is the current yield as of August 31, 2015.
                

 
 
 


Various inputs are used in determining the fair value of the Company’s investments and 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 assets and liabilities by level within the fair value hierarchy as of August 31, 2015.  These assets and liabilities are measured on a recurring basis.

Description
  
Level 1
    
Level 2
    
Level 3
    
Total
  
Assets
                        
Investments:
                        
Corporate Bonds(a)
   $ -     $ 129,694,383     $ -     $ 129,694,383  
Common Stock(a)
     28,155,810       -       -       28,155,810  
Master Limited Partnerships and Related Companies(a)
     64,868,957       -       -       64,868,957  
Preferred Convertible(a)
     1,113,860       -       -       1,113,860  
Short-Term Investment(b)
     32,301       -       -       32,301  
Total Assets
   $ 94,170,928     $ 129,694,383     $ -     $ 223,865,311  
Liabilities
                                
Interest Rate Swap Contracts
   $ -     $ 364,794     $ -     $ 364,794  
 
(a)  
All other industry classifications are identified in the Schedule of Investments.
(b)  
Short-term investment is a sweep investment for cash balances.

The Company did not hold any Level 3 securities during the period ended August 31, 2015.  The Company utilizes the beginning of reporting period method for determining transfers between levels. During the period ended August 31, 2015, TerraForm Power, Inc. common units held by the Company in the amount of $4,054,700 were transferred from Level 2 to Level 1 when they converted into registered and unrestricted common units of TerraForm Power, Inc.  There were no other transfers between levels for the Company during the period ended August 31, 2015.
 
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.  The Company primarily owns securities that are listed on a securities exchange or over-the-counter market. The Company values those securities at their last sale price on that exchange or over-the-counter market on the valuation date.  If the security is listed on more than one exchange, the Company uses the price from the exchange that it considers to be the principal exchange on which the security is traded. Securities listed on the NASDAQ are valued at the NASDAQ Official Closing Price, which may not necessarily represent the last sale price.  If there has been no sale on such exchange or over-the-counter market on such day, the security is valued at the mean between the last bid price and last ask price on such day. These securities are categorized as Level 1 in the fair value hierarchy as further described below.
 
Restricted securities are subject to statutory or contractual restrictions on their public resale, which may make it more difficult to obtain a valuation and may limit a fund’s ability to dispose of them. Investments in private placement securities and other securities for which market quotations are not readily available are valued in good faith by using certain fair value procedures. Such fair value procedures consider factors such as discounts to publicly traded issues, time until conversion date, securities with similar yields, quality, type of issue, coupon, duration and rating. If events occur that affect the value of the Company’s portfolio securities before the net asset value has been calculated (a “significant event”), the portfolio securities so affected are generally priced using fair value procedures.
 
An equity security of a publicly traded company acquired in a private placement transaction without registration under the Securities Act of 1933, as amended (the “1933 Act”), is subject to restrictions on resale that can affect the security's liquidity and fair value.  If such a security is convertible into publicly-traded common shares, the security generally will be valued at the common share market price adjusted by a percentage discount due to the restrictions and categorized as Level 2 in the fair value hierarchy.  To the extent that such securities are convertible or otherwise become freely tradable within a time frame that may be reasonably determined, an amortization schedule may be used to determine the discount.  If the security has characteristics that are dissimilar to the class of security that trades on the open market, the security will generally be valued and categorized as Level 3 in the fair value hierarchy.
 
The Company generally values debt securities at evaluated bid prices obtained from an independent third-party valuation service that utilizes a pricing matrix based upon yield data for securities with similar characteristics, or based on a direct written broker-dealer quotation from a dealer who has made a market in the security.  Debt securities with 60 days or less to maturity are valued on the basis of amortized cost, which approximates market value.
 
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, and are categorized as Level 2 in the fair value hierarchy.
 
Certain of the Company’s investments are restricted and are valued as determined in accordance with fair value procedures, as more fully described above.  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, 2015.

Investment Security
  
Principal Amount
  
Acquisition Date(s)
  
Acquisition Cost
    
Fair Value
    
Fair Value as Percent of Net Assets
  
Columbia Pipeline Group, Inc., 3.300%, 06/01/2020*
   $ 2,000,000  
05/19/15
   $ 1,996,400     $ 1,996,102       1.2 %
DCP Midstream LLC, 9.750%, 03/15/2019*
   $ 3,000,000  
08/07/09-08/16/12
     3,674,870       3,306,525       1.9  
Duquesne Light Holdings, Inc., 6.400%, 09/15/2020*
   $ 3,000,000  
11/30/11
     3,180,330       3,436,551       2.0  
Duquesne Light Holdings, Inc., 5.900%, 12/01/2021*
   $ 2,000,000  
11/18/11-12/05/11
     2,074,420       2,273,024       1.3  
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020*
   $ 1,500,000  
07/08/10-01/04/11
     1,551,220       1,635,999       1.0  
Gibson Energy Inc., 6.750%, 07/15/2021*
   $ 4,500,000  
06/26/13-07/01/13
     4,459,760       4,376,250       2.6  
Midcontinent Express Pipeline, LLC, 6.700%, 09/15/2019*
   $ 6,000,000  
09/09/09-03/02/10
     6,055,570       6,240,000       3.6  
Rockies Express Pipeline, LLC, 6.000%, 01/15/2019*
   $ 4,000,000  
08/03/15
     4,130,000       4,000,000       2.3  
Ruby Pipeline, LLC, 6.000%, 04/01/2022*
   $ 1,500,000  
09/17/12
     1,616,250       1,615,497       0.9  
Source Gas, LLC, 5.900%, 04/01/2017*
   $ 5,770,000  
04/21/10
     5,544,521       6,080,599       3.6  
Southern Star Central Corp., 5.125%, 07/15/2022*
   $ 3,000,000  
06/17/14
     3,041,250       2,925,000       1.7  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016*
   $ 2,000,000  
08/24/09
     1,970,000       2,058,136       1.2  
              $ 39,294,591     $ 39,943,683       23.3 %
*Security is eligible for resale under Rule 144A under the Securities Act of 1933.
 
As of August 31, 2015, the aggregate cost of securities for federal income tax purposes was $184,475,835.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $46,478,931, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $7,089,455 and the net unrealized appreciation was $39,389,476.
 
 
 
 
 


Item 2. Controls and Procedures.
 
(a)  
The registrant’s Chief Executive Officer and its Principal 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 23, 2015
By:
  /s/ P. Bradley Adams  
    P. Bradley Adams  
    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 23, 2015
By:
  /s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Executive Officer  
       
  Tortoise Power and Energy Infrastructure Fund, Inc.  
       
Date: October 23, 2015
By:
 /s/ Brent Behrens  
    Brent Behrens  
    Principal Financial Officer and Treasurer