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:  August 31, 2010


 
 
 
 
 
Item 1. Schedule of Investments.
 
Tortoise Power and Energy Infrastructure Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
August 31, 2010
  
     
Principal Amount/Shares
  
Corporate Bonds - 71.4% (1)
        
Fair Value
  
Crude/Refined Products Pipelines - 2.0% (1)
            
Canada - 2.0% (1)
            
Gibson Energy ULC/GEP Midstream Finance Corp., 10.000%, 01/15/2018
   $ 3,250,000     $ 3,185,000  
                   
Natural Gas/Natural Gas Liquids Pipelines - 18.6% (1)
                
Canada - 3.4% (1)
                
TransCanada Pipelines Limited, 6.350%, 05/15/2067
     6,000,000       5,476,440  
United States - 15.2% (1)
                
El Paso Corp., 12.000%, 12/12/2013
     4,000,000       4,820,000  
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020 (2)
     500,000       536,662  
Midcontinent Express Pipeline LLC, 6.700%, 09/15/2019 (2)
     6,000,000       6,538,236  
NGPL PipeCo LLC, 7.119%, 12/15/2017 (2)
     3,000,000       3,193,725  
Southern Star Central Corp., 6.750%, 03/01/2016
     2,745,000       2,765,588  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016 (2)
     2,000,000       2,075,000  
Southern Union Co., 7.600%, 02/01/2024
     3,500,000       4,216,985  
                29,622,636  
Natural Gas Gathering/Processing - 6.2% (1)
                
United States - 6.2% (1)
                
DCP Midstream LLC, 9.750%, 03/15/2019 (2)
     4,000,000       5,313,528  
Enogex LLC, 6.250%, 03/15/2020 (2)
     4,000,000       4,511,592  
                9,825,120  
Oil and Gas Exploration and Production - 5.7% (1)
                
United States - 5.7% (1)
                
Chesapeake Energy Corp., 7.250%, 12/15/2018
     2,000,000       2,090,000  
Encore Acquisition Co., 9.500%, 05/01/2016
     1,500,000       1,635,000  
Newfield Exploration Co., 7.125%, 05/15/2018
     1,000,000       1,046,250  
Pioneer Natural Resources Co., 6.875%, 05/01/2018
     1,000,000       1,044,957  
Plains Exploration & Production Co., 10.000%, 03/01/2016
     3,000,000       3,285,000  
                9,101,207  
Oilfield Services - 2.1% (1)
                
United States - 2.1% (1)
                
Pride International, Inc., 8.500%, 06/15/2019
     3,000,000       3,397,500  
                   
Power/Utility - 34.8% (1)
                
United States - 34.8% (1)
                
CenterPoint Energy, Inc., 6.500%, 05/01/2018
     4,000,000       4,617,188  
CMS Energy Corp., 8.750%, 06/15/2019
     4,185,000       4,905,297  
Dominion Resources, Inc., 8.375%, 06/15/2064
     183,000       5,277,720  
FPL Group Capital, Inc., 6.650%, 06/15/2067
     1,029,000       977,550  
Illinois Power Co., 9.750%, 11/15/2018
     2,000,000       2,692,010  
Integrys Energy Group, Inc., 6.110%, 12/01/2066
     3,750,000       3,393,750  
IPALCO Enterprises, Inc., 7.250%, 04/01/2016 (2)
     2,000,000       2,090,000  
NiSource Finance Corp., 10.750%, 03/15/2016
     3,500,000       4,585,865  
North American Energy Alliance LLC, 10.875%, 06/01/2016 (2)
     2,800,000       3,024,000  
NRG Energy, Inc., 8.500%, 06/15/2019
     6,000,000       6,165,000  
PPL Capital Funding, Inc., 6.700%, 03/30/2067
     6,000,000       5,625,000  
Sierra Pacific Resources, 6.750%, 08/15/2017
     3,000,000       3,095,472  
Source Gas, LLC, 5.900%, 04/01/2017 (2)
     5,770,000       5,760,808  
Wisconsin Energy Corp., 6.250%, 05/15/2067
     3,450,000       3,260,250  
 
               55,469,910  
Refining - 2.0% (1)
                
United States - 2.0% (1)
                
Holly Corp., 9.875%, 06/15/2017
     3,000,000       3,150,000  
                   
Total Corporate Bonds (Cost $106,338,463)
             113,751,373  
                   
Master Limited Partnerships and Related Companies - 48.5% (1)
                
                   
Crude/Refined Products Pipelines - 25.1% (1)
                
United States - 25.1% (1)
                
Buckeye Partners, L.P.
     25,300     $ 1,544,818  
Enbridge Energy Management, L.L.C. (3)
     284,076       15,075,900  
Holly Energy Partners, L.P.
     27,549       1,377,450  
Kinder Morgan Management, LLC (3)(4)
     275,683       16,284,619  
Magellan Midstream Partners, L.P.
     19,400       940,124  
NuStar Energy L.P.
     32,600       1,857,874  
Plains All American Pipeline, L.P.
     16,500       990,660  
Sunoco Logistics Partners L.P.
     26,481       1,960,918  
 
               40,032,363  
Natural Gas/Natural Gas Liquids Pipelines - 12.2% (1)
                
United States - 12.2% (1)
                
Boardwalk Pipeline Partners, LP
     120,000       3,667,200  
Duncan Energy Partners L.P.
     101,700       2,821,158  
Energy Transfer Equity, L.P.
     27,809       966,363  
Energy Transfer Partners, L.P.
     107,700       4,920,813  
Enterprise Products Partners L.P.
     33,600       1,242,192  
Niska Gas Storage Partners LLC
     6,866       129,630  
ONEOK Partners, L.P.
     66,600       4,582,080  
Williams Partners, L.P.
     6,000       252,660  
Williams Pipeline Partners L.P.
     23,645       753,330  
                19,335,426  
Natural Gas Gathering/Processing - 6.6% (1)
                
United States - 6.6% (1)
                
Copano Energy, L.L.C.
     93,200       2,341,184  
DCP Midstream Partners, LP
     85,200       2,705,952  
MarkWest Energy Partners, L.P.
     56,700       1,889,244  
Regency Energy Partners, L.P.
     10,600       252,068  
Targa Resources Partners L.P.
     132,417       3,348,826  
                10,537,274  
Propane Distribution - 4.6% (1)
                
United States - 4.6% (1)
                
Inergy, L.P.
     197,500       7,354,900  
                   
Total Master Limited Partnerships and Related Companies (Cost $55,504,052)
             77,259,963  
                   
Short-Term Investment - 0.0% (1)
                
United States Investment Company - 0.0% (1)
                
Fidelity Institutional Government Portfolio - Class I, 0.06% (5) (Cost $66,481)
     66,481     $ 66,481  
                   
Total Investments - 119.9% (1) (Cost $161,908,996)
             191,077,817  
                   
Long-Term Debt Obligations - (12.5%) (1)
             (20,000,000 )
                   
Interest Rate Swap Contracts - (0.7%) (1)
                
                   
$27,000,000 notional - Unrealized Depreciation
             (1,078,512 )
Other Assets and Liabilities - (6.7%) (1)
             (10,637,346 )
                   
Total Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 159,361,959  
                   
(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 $33,043,551, which represents 20.7% of net assets.
 
(3)
Security distributions are paid-in-kind.
                
(4)
All or 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 August 31, 2010.
                



 
 
 

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 August 31, 2010.  These assets and liabilities are measured on a recurring basis.

   
Fair Value at
                    
Description
  
August 31, 2010
    
Level 1
    
Level 2
    
Level 3
  
Assets
Debt Securities:
                        
Corporate Bonds(a)
   $ 113,751,373     $ 5,277,720     $ 108,473,653     $ -  
Total Debt Securities
     113,751,373       5,277,720       108,473,653       -  
Equity Securities:
                                
Master Limited
Partnerships and
Related Companies(a)
     77,259,963       77,259,963       -       -  
Total Equity Securities
     77,259,963       77,259,963       -       -  
Other:
                                
Short-Term Investment(b)
     66,481       66,481       -       -  
Total Other
     66,481       66,481       -       -  
Total Assets
   $ 191,077,817     $ 82,604,164     $ 108,473,653     $ -  
 
Liabilities
Interest Rate Swap Contracts
   $ 1,078,512     $ -     $ 1,078,512     $ -  
Total
   $ 189,999,305     $ 82,604,164     $ 107,395,141     $ -  

(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, 2010.

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.

There were no transfers between levels for the period from December 1, 2009 through August 31, 2010.
 
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, 2010.
 
Company
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
  $5,313,528
   3.3%
Enogex LLC,
          
   6.250%, 03/15/2020
   4,000,000
02/26/10-04/22/10
   4,118,593
    4,511,592
2.8
IPALCO Enterprises, Inc.,
          
   7.250%, 04/01/2016
   2,000,000
11/03/09
   2,015,000
    2,090,000
1.3
Midcontinent Express Pipelines, LLC,
          
   6.700%, 09/15/2019
   6,000,000
09/09/09-03/02/10
   6,055,570
    6,538,236
4.1
NGPL PipeCo, LLC,
          
   7.119%, 12/15/2017
   3,000,000
07/29/10
   3,195,000
    3,193,725
2.0
North American Energy Alliance LLC,
          
   10.875%, 06/01/2016
   2,800,000
09/24/09-10/08/09
   2,895,000
    3,024,000
1.9
Panhandle Eastern Pipe Line Co., LP,
          
   5.450%, 07/15/2020
     500,000
07/08/10
     499,130
      536,662
0.4
Source Gas, LLC,
          
   5.900%, 04/01/2017
   5,770,000
04/21/10
   5,544,521
    5,760,808
3.6
Southern Star Central Gas Pipeline, Inc.,
          
   6.000%, 06/01/2016
   2,000,000
08/24/09
    1,970,000
    2,075,000
1.3
 
    
$31,062,164
$33,043,551
  20.7%

As of August 31, 2010, the aggregate cost of securities for federal income tax purposes was $160,017,454.  The aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $31,060,363, 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 $31,060,363.

 
 
 


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:  October 28, 2010
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:  October 28, 2010
By:
 /s/ David J. Schulte  
    David J. Schulte   
    President and Chief Executive Officer  
       
  Tortoise Power and Energy Infrastructure Fund, Inc.  
       
Date:  October 28, 2010
By:
 /s/ Terry Matlack  
    Terry Matlack  
    Chief Financial Officer