The recently experienced nation-wide electricity shortage affected our society and economy deeply. Although the shortage has been reduced greatly, we must discuss why this happened. In this paper, we created a constrained Bertrand competition model to explore the reasons of electricity shortage. Our model indicates that the exogenous shocks on electricity demand may result in soft shortage because of constrained coal production, even if the installed capacity is sufficient enough. We also discussed the problems of vertical integration and price co-fluctuation of coal and electricity industry. Our analysis concludes that these measures only can release the matters temporarily and we must resort to the market-oriented reform of electricity industry.