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:  February 28, 2015
 
 
 
 
Item 1. Schedule of Investments.
 
Tortoise Power and Energy Infrastructure Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
February 28, 2015
  
       
 
  
       Principal Amount/Shares    
Fair Value
  
Corporate Bonds - 65.9% (1)
            
Crude/Refined Products Pipelines - 5.1% (1)
            
Canada - 2.3% (1)
            
Gibson Energy Inc., 6.750%, 07/15/2021 (2)
   $ 4,500,000     $ 4,635,000  
United States - 2.8% (1)
                
SemGroup Corp., 7.500%, 06/15/2021
     5,450,000       5,722,500  
                10,357,500  
Local Distribution Companies - 7.3% (1)
                
United States - 7.3% (1)
                
CenterPoint Energy, Inc., 6.500%, 05/01/2018 (3)
     4,000,000       4,548,284  
NiSource Finance Corp., 6.400%, 03/15/2018 (3)
     3,500,000       3,985,807  
Source Gas, LLC, 5.900%, 04/01/2017 (2) (3)
     5,770,000       6,170,802  
                14,704,893  
Natural Gas/Natural Gas Liquids Pipelines - 15.7% (1)
                
Canada - 2.8% (1)
                
TransCanada Pipelines Limited, 6.350%, 05/15/2067
     6,000,000       5,775,000  
United States - 12.9% (1)
                
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020 (2) (3)
     1,500,000       1,674,648  
Kinder Morgan Inc., 6.500%, 09/15/2020 (3)
     6,000,000       6,922,422  
Midcontinent Express Pipeline LLC, 6.700%, 09/15/2019 (2)
     6,000,000       6,525,000  
ONEOK, Inc., 4.250%, 02/01/2022
     4,500,000       4,248,045  
Ruby Pipeline, LLC, 6.000%, 04/01/2022 (2) (3)
     1,500,000       1,609,413  
Southern Star Central Corp., 5.125%, 07/15/2022 (2)
     3,000,000       3,082,500  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016 (2) (3)
     2,000,000       2,093,720  
                31,930,748  
                   
Natural Gas Gathering/Processing - 4.4% (1)
                
United States - 4.4% (1)
                
DCP Midstream LLC, 9.750%, 03/15/2019 (2) (3)
     4,000,000       4,432,044  
The Williams Companies, Inc., 7.875%, 09/01/2021
     4,000,000       4,522,128  
                8,954,172  
                   
Oil and Gas Exploration and Production - 8.3% (1)
                
United States - 8.3% (1)
                
Carrizo Oil & Gas, Inc., 7.500%, 09/15/2020
     2,000,000       2,042,500  
Chesapeake Energy Corp., 7.250%, 12/15/2018
     3,500,000       3,876,250  
Concho Resources, Inc., 5.500%, 04/01/2023
     2,000,000       2,070,000  
EP Energy / EP Finance Inc., 9.375%, 05/01/2020
     3,000,000       3,202,500  
EQT Corp., 6.500%, 04/01/2018
     2,000,000       2,208,790  
EQT Corp., 8.125%, 06/01/2019
     2,000,000       2,387,666  
Range Resources Corp., 5.000%, 03/15/2023
     1,000,000       1,022,500  
                16,810,206  
Oilfield Services - 1.8% (1)
                
United States - 1.8% (1)
                
Pride International, Inc., 8.500%, 06/15/2019 (3)
     3,000,000       3,566,970  
                   
Power/Utility - 23.3% (1)
                
United States - 23.3% (1)
                
CMS Energy Corp., 8.750%, 06/15/2019
     5,185,000       6,485,870  
CMS Energy Corp., 5.050%, 03/15/2022
     2,000,000       2,253,494  
Dominion Resources, Inc., 5.750%, 10/01/2054
     4,000,000       4,257,808  
Duquesne Light Holdings, Inc., 6.400%, 09/15/2020 (2)
     3,000,000       3,556,569  
Duquesne Light Holdings, Inc., 5.900%, 12/01/2021 (2)
     2,000,000       2,350,234  
Integrys Energy Group, Inc., 6.110%, 12/01/2066 (3)
     3,750,000       3,721,875  
IPALCO Enterprises, Inc., 7.250%, 04/01/2016 (2)
     4,000,000       4,210,000  
NextEra Energy Capital Holdings, Inc., 6.650%, 06/15/2067
     1,029,000       1,028,979  
NRG Energy, Inc., 6.250%, 07/15/2022
     6,000,000       6,255,000  
NRG Yield Operating LLC, 5.375%, 08/15/2024 (2)
     2,500,000       2,637,500  
NV Energy, Inc., 6.250%, 11/15/2020 (3)
     1,000,000       1,176,288  
PPL Capital Funding, Inc., 6.700%, 03/30/2067 (3)
     6,000,000       5,925,000  
Wisconsin Energy Corp., 6.250%, 05/15/2067
     3,450,000       3,467,077  
 
               47,325,694  
                   
Total Corporate Bonds (Cost $124,780,889)
             133,650,183  
                   
Master Limited Partnerships and Related Companies - 36.5% (1)
                
Crude/Refined Products Pipelines - 22.5% (1)
                
United States - 22.5% (1)
                
Buckeye Partners, L.P. (3)
     46,153       3,587,934  
Enbridge Energy Management, L.L.C. (3) (4)
     461,540       17,206,199  
Genesis Energy, L.P.
     11,800       542,800  
Holly Energy Partners, L.P.
     56,100       1,865,325  
Magellan Midstream Partners, L.P.
     59,790       4,914,738  
MPLX LP
     9,293       763,885  
NuStar Energy L.P. (3)
     31,200       1,966,848  
Phillips 66 Partners LP
     15,500       1,103,445  
Plains All American Pipeline, L.P.
     84,765       4,228,926  
Shell Midstream Partners, L.P.
     18,024       704,017  
Sunoco Logistics Partners L.P. (3)
     124,035       5,484,828  
Tesoro Logistics LP
     44,417       2,550,424  
Valero Energy Partners LP
     13,794       735,082  
 
               45,654,451  
                   
Natural Gas/Natural Gas Liquids Pipelines - 8.3% (1)
                
United States - 8.3% (1)
                
Columbia Pipeline Partners LP
     22,959       635,735  
Energy Transfer Equity, L.P.
     33,384       2,132,236  
Energy Transfer Partners, L.P. (3)
     101,200       6,019,376  
Enterprise Products Partners L.P.
     164,409       5,481,396  
ONEOK Partners, L.P.
     61,203       2,557,673  
                16,826,416  
                   
Natural Gas Gathering/Processing - 5.7% (1)
                
United States - 5.7% (1)
                
Antero Midstream Partners LP
     22,434       583,284  
DCP Midstream Partners, LP
     58,232       2,317,634  
EnLink Midstream Partners, L.P.
     22,400       601,664  
MarkWest Energy Partners, L.P.
     56,700       3,682,665  
Regency Energy Partners, LP
     22,159       540,458  
Targa Resources Partners LP
     86,500       3,790,430  
                11,516,135  
                   
Total Master Limited Partnerships and Related Companies (Cost $29,887,686)
             73,997,002  
                   
Common Stock - 21.0% (1)
                
Natural Gas/Natural Gas Liquids Pipelines - 8.0% (1)
                
Canada - 0.6% (1)
                
TransCanada Corp.
     26,100       1,143,963  
United States - 7.4% (1)
                
Kinder Morgan, Inc. (3)
     259,032       10,622,902  
ONEOK, Inc.
     37,024       1,638,682  
Spectra Energy Corp
     78,095       2,771,592  
                16,177,139  
Power/Utility - 11.4% (1)
                
United Kingdom - 0.7% (1)
                
Abengoa Yield plc
     45,900       1,505,061  
United States - 10.7% (1)
                
InfraREIT, Inc.
     184,668       5,008,196  
NextEra Energy Partners, LP
     79,127       3,121,560  
NRG Yield, Inc.
     94,610       4,854,439  
TerraForm Power, Inc.(5)
     247,822       8,606,858  
                23,096,114  
                   
Natural Gas Gathering/Processing - 1.6% (1)
                
United States - 1.6% (1)
                
The Williams Companies, Inc.
     66,513       3,261,798  
                   
Total Common Stock (Cost $32,033,389)
             42,535,051  
                   
Short-Term Investment - 0.1% (1)
                
United States Investment Company - 0.1% (1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.08% (6) (Cost $118,188)
     118,188       118,188  
                   
Total Investments - 123.5% (1) (Cost $186,820,152)
             250,300,424  
Interest Rate Swap Contracts - (0.2%) (1)
                
$26,000,000 notional - unrealized depreciation
            (330,460 )
Other Assets and Liabilities - (23.3%) (1)
             (47,322,523 )
Total Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 202,647,441  
                   
                   
(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 $42,977,430, which represents 21.2% 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 $330,460.
          
(6)
Rate indicated is the current yield as of February 28, 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 Company assets and liabilities by level within the fair value hierarchy as of February 28, 2015.  These assets and liabilities are measured on a recurring basis.

Description
Level 1
  
Level 2
    
Level 3
    
Total
  
Assets
                    
Investments:
                    
Corporate Bonds(a)
 $ -   $ 133,650,183     $ -     $ 133,650,183  
Common Stock(a)
   42,535,051     -       -       42,535,051  
Master Limited Partnerships and Related Companies(a)
   73,997,002     -       -       73,997,002  
Short-Term Investment(b)
   118,188     -       -       118,188  
Total Assets
 $ 116,650,241   $ 133,650,183     $ -     $ 250,300,424  
Liabilities
                            
Interest Rate Swap Contracts
 $ -   $ 330,460     $ -     $ 330,460  
 
(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 February 28, 2015.  The Company utilizes the beginning of reporting period method for determining transfers between levels.  During the period ended February 28, 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 February 28, 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 pricing 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.  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 February 28, 2015.  Each of the securities in the table below is 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
 $ 4,000,000  
08/07/09-08/17/12
 $ 4,863,620   $ 4,432,044       2.2 %
Duquesne Light Holdings, Inc., 6.400%, 09/15/2020
   3,000,000  
11/30/11
   3,180,330     3,556,569       1.8  
Duquesne Light Holdings, Inc., 5.900%, 12/01/2021
   2,000,000  
11/18/11-12/05/11
   2,074,420     2,350,234       1.2  
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020
   1,500,000  
07/08/10-01/04/11
   1,551,220     1,674,648       0.8  
Gibson Energy Inc., 6.750%, 07/15/2021
   4,500,000  
06/26/13-07/01/13
   4,459,760     4,635,000       2.3  
IPALCO Enterprises, Inc., 7.250%, 04/01/2016
   4,000,000  
11/03/09-01/04/11
   4,165,000     4,210,000       2.1  
Midcontinent Express Pipeline, LLC, 6.700%, 09/15/2019
   6,000,000  
09/09/09-03/02/10
   6,055,570     6,525,000       3.2  
NRG Yield Operating LLC,   5.375%, 08/15/2024
   2,500,000  
07/31/14
   2,530,000     2,637,500       1.3  
Ruby Pipeline, LLC, 6.000%, 04/01/2022
   1,500,000  
09/17/12
   1,616,250     1,609,413       0.8  
Source Gas, LLC, 5.900%, 04/01/2017
   5,770,000  
04/21/10
   5,544,521     6,170,802       3.0  
Southern Star Central Corp., 5.125%, 07/15/2022
   3,000,000  
06/17/14
   3,041,250     3,082,500       1.5  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016
   2,000,000  
08/24/09
   1,970,000     2,093,720       1.0  
          $ 45,951,941   $ 42,977,430       21.2 %

As of February 28, 2015, the aggregate cost of securities for federal income tax purposes was $180,141,141.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $72,807,366, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $2,648,083 and the net unrealized appreciation was $70,159,283.

 
 
 


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:  April 29, 2015
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: April 29, 2015
By:
  /s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
  Tortoise Power and Energy Infrastructure Fund, Inc.  
       
Date: April 29, 2015
By:
 /s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer