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:  February 28, 2011

 
 
 
 
 
Item 1. Schedule of Investments.
 
Tortoise Power and Energy Infrastructure Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
February 28, 2011
  
Corporate Bonds - 65.1% (1)
     Principal Amount/Shares    
Fair Value
  
Crude/Refined Products Pipelines - 1.9% (1)
            
Canada - 1.9% (1)
            
Gibson Energy ULC/GEP Midstream Finance Corp., 10.000%, 01/15/2018
   $ 3,250,000     $ 3,396,250  
                   
Natural Gas/Natural Gas Liquids Pipelines - 18.5% (1)
                
Canada - 3.4% (1)
                
TransCanada Pipelines Limited, 6.350%, 05/15/2067
     6,000,000       6,098,358  
United States - 15.1% (1)
                
El Paso Corp., 6.500%, 09/15/2020 (2)
     4,000,000       4,258,784  
El Paso Corp., 7.000%, 06/15/2017
     1,000,000       1,117,219  
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020 (2)
     1,500,000       1,571,618  
Midcontinent Express Pipeline LLC, 6.700%, 09/15/2019 (2)
     6,000,000       6,631,176  
NGPL PipeCo LLC, 7.119%, 12/15/2017 (2)
     4,000,000       4,497,776  
Southern Star Central Corp., 6.750%, 03/01/2016
     2,745,000       2,799,900  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016 (2)
     2,000,000       2,161,278  
Southern Union Co., 7.600%, 02/01/2024
     3,500,000       3,860,440  
                32,996,549  
Natural Gas Gathering/Processing - 5.3% (1)
                
United States - 5.3% (1)
                
DCP Midstream LLC, 9.750%, 03/15/2019 (2)
     4,000,000       5,178,344  
Enogex LLC, 6.250%, 03/15/2020 (2)
     4,000,000       4,295,432  
                9,473,776  
Oil and Gas Exploration and Production - 5.3% (1)
                
United States - 5.3% (1)
                
Chesapeake Energy Corp., 7.250%, 12/15/2018
     2,000,000       2,205,000  
Encore Acquisition Co., 9.500%, 05/01/2016
     1,500,000       1,695,000  
Newfield Exploration Co., 7.125%, 05/15/2018
     1,000,000       1,067,500  
Pioneer Natural Resources Co., 6.875%, 05/01/2018
     1,000,000       1,085,681  
Plains Exploration & Production Co., 10.000%, 03/01/2016
     3,000,000       3,405,000  
                9,458,181  
Oilfield Services - 2.0% (1)
                
United States - 2.0% (1)
                
Pride International, Inc., 8.500%, 06/15/2019
     3,000,000       3,660,000  
                   
Power/Utility - 30.2% (1)
                
United States - 30.2% (1)
                
Ameren Illinois Power Co., 9.750%, 11/15/2018
     2,000,000       2,576,394  
CenterPoint Energy, Inc., 6.500%, 05/01/2018
     4,000,000       4,507,244  
CMS Energy Corp., 8.750%, 06/15/2019
     4,185,000       5,013,584  
Dominion Resources, Inc., 8.375%, 06/15/2064
     183,000       5,279,550  
FPL Group Capital, Inc., 6.650%, 06/15/2067
     1,029,000       1,023,855  
Integrys Energy Group, Inc., 6.110%, 12/01/2066
     3,750,000       3,646,875  
IPALCO Enterprises, Inc., 7.250%, 04/01/2016 (2)
     4,000,000       4,340,000  
North American Energy Alliance LLC, 10.875%, 06/01/2016 (2)
     2,800,000       3,164,000  
NRG Energy, Inc., 8.500%, 06/15/2019
     6,000,000       6,390,000  
PPL Capital Funding, Inc., 6.700%, 03/30/2067
     6,000,000       5,895,000  
Sierra Pacific Resources, 6.750%, 08/15/2017
     3,000,000       3,073,437  
Source Gas, LLC, 5.900%, 04/01/2017 (2)
     5,770,000       5,701,210  
Wisconsin Energy Corp., 6.250%, 05/15/2067
     3,450,000       3,445,687  
 
               54,056,836  
Refining - 1.9% (1)
                
United States - 1.9% (1)
                
Holly Corp., 9.875%, 06/15/2017
     3,000,000       3,337,500  
                   
Total Corporate Bonds (Cost $107,123,432)
             116,379,092  
                   
Master Limited Partnerships and Related Companies - 52.2% (1)
                
                   
Crude/Refined Products Pipelines - 26.4% (1)
                
United States - 26.4% (1)
                
Buckeye Partners, L.P.
     25,300     $ 1,639,946  
Enbridge Energy Management, L.L.C. (3) (4)
     284,098       18,994,802  
Holly Energy Partners, L.P.
     27,549       1,643,298  
Kinder Morgan Management, LLC (3)
     275,496       18,075,293  
Magellan Midstream Partners, L.P.
     19,400       1,172,536  
NuStar Energy L.P.
     32,600       2,286,890  
Plains All American Pipeline, L.P.
     16,500       1,080,255  
Sunoco Logistics Partners L.P.
     26,481       2,343,304  
 
               47,236,324  
Natural Gas/Natural Gas Liquids Pipelines - 13.2% (1)
                
United States - 13.2% (1)
                
Boardwalk Pipeline Partners, LP
     120,000       3,985,200  
Duncan Energy Partners L.P.
     101,700       4,142,241  
Energy Transfer Equity, L.P.
     27,809       1,117,644  
Energy Transfer Partners, L.P.
     107,700       5,905,191  
Enterprise Products Partners L.P.
     33,600       1,464,960  
Niska Gas Storage Partners LLC
     6,866       139,036  
ONEOK Partners, L.P.
     66,600       5,537,790  
Williams Partners, L.P.
     23,932       1,241,113  
                23,533,175  
Natural Gas Gathering/Processing - 8.0% (1)
                
United States - 8.0% (1)
                
Copano Energy, L.L.C.
     93,200       3,374,772  
DCP Midstream Partners, LP
     85,200       3,600,552  
MarkWest Energy Partners, L.P.
     56,700       2,545,830  
Regency Energy Partners, L.P.
     10,600       294,362  
Targa Resources Partners L.P.
     132,417       4,535,282  
                14,350,798  
Propane Distribution - 4.6% (1)
                
United States - 4.6% (1)
                
Inergy, L.P.
     197,500       8,192,300  
                   
Total Master Limited Partnerships and Related Companies (Cost $53,211,808)
       93,312,597  
                   
Short-Term Investment - 0.0% (1)
                
United States Investment Company - 0.0% (1)
                
Fidelity Institutional Government Portfolio - Class I, 0.01% (5) (Cost $37,166)
     37,166     $ 37,166  
                   
Total Investments - 117.3% (1) (Cost $160,372,406)
             209,728,855  
                   
Long-Term Debt Obligations - (11.2%) (1)
             (20,000,000 )
                   
Interest Rate Swap Contracts - (0.4%) (1)
                
                   
$27,000,000 notional - Unrealized Depreciation
             (683,459 )
Other Assets and Liabilities - (5.7%) (1)
             (10,312,985 )
                   
Total Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 178,732,411  
                   
                   
(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 $41,799,618, which represents 23.4% of net assets.
 
(3)
Security distributions are paid-in-kind.
                
(4)
A portion of the security is segregated as collateral for the unrealized depreciation of interest rate swap contracts.
  
(5)
Rate indicated is the current yield as of February 28, 2011.
                

 
 
 

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 February 28, 2011.  These assets and liabilities are measured on a recurring basis.

 
Fair Value at
              
Description
February 28, 2011
  
Level 1
  
Level 2
  
Level 3
  
Assets
Debt Securities:
                
Corporate Bonds(a)
 $ 116,379,092   $ 5,279,550   $ 111,099,542   $ -  
Total Debt Securities
   116,379,092     5,279,550     111,099,542     -  
Equity Securities:
                        
Master Limited Partnerships and Related Companies(a)  
   93,312,597     93,312,597     -     -  
Total Equity Securities
   93,312,597     93,312,597     -     -  
 Other:
                        
Short-Term Investment(b)
   37,166     37,166     -     -  
Total Other
   37,166     37,166     -     -  
Total Assets
 $ 209,728,855   $ 98,629,313   $ 111,099,542   $ -  
 
Liabilities
Interest Rate Swap Contracts
 $ 683,459   $ -   $ 683,459   $ -  
Total
 $ 209,045,396   $ 98,629,313   $ 110,416,083   $ -  

(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 February 28, 2011.

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, 2010 through February 28, 2011.
 
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 February 28, 2011.

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
08/07/09-08/27/09
$  4,769,350
$  5,178,344
2.9%
El Paso Corp.,
          
   6.500%, 09/15/2020
4,000,000
09/24/10
4,000,000
4,258,784
2.4
Enogex LLC,
          
   6.250%, 03/15/2020
4,000,000
02/26/10-04/22/10
4,118,593
4,295,432
2.4
Florida Gas Transmission Co., LLC,
          
   5.450%, 07/15/2020
1,500,000
07/08/10-01/04/11
1,551,220
1,571,618
0.9
IPALCO Enterprises, Inc.,
          
   7.250%, 04/01/2016
4,000,000
11/03/09-01/04/11
4,165,000
4,340,000
2.4
Midcontinent Express Pipelines, LLC,
          
   6.700%, 09/15/2019
6,000,000
09/09/09-03/02/10
6,055,570
6,631,176
3.7
NGPL PipeCo, LLC,
          
   7.119%, 12/15/2017
4,000,000
07/29/10-09/28/10
4,280,000
4,497,776
2.5
North American Energy Alliance LLC,
          
   10.875%, 06/01/2016
2,800,000
09/24/09-10/08/09
2,895,000
3,164,000
1.8
Source Gas, LLC,
          
   5.900%, 04/01/2017
5,770,000
04/21/10
5,544,521
5,701,210
3.2
Southern Star Central Gas Pipeline, Inc.,
          
   6.000%, 06/01/2016
2,000,000
08/24/09
1,970,000
2,161,278
1.2
 
    
$ 39,349,254
$ 41,799,618
23.4%

As of February 28, 2011, the aggregate cost of securities for federal income tax purposes was $158,312,624.  The aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $51,416,231, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $0 and the net unrealized appreciation was $51,416,231.

 
 
 
 


Item 2. Controls and Procedures.
 
(a)  
The registrant’s President and 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 20, 2011
By:
  /s/ David J. Schulte  
    David J. Schulte  
    President and 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 20, 2011
By:
  /s/ David J. Schulte  
    David J. Schulte   
    President and Chief Executive Officer  
       
  Tortoise Power and Energy Infrastructure Fund, Inc.  
       
Date:  April 20, 2011
By:
 /s/ Terry Matlack  
    Terry Matlack  
    Chief Financial Officer