The Upgrade Spatial Reference tool fails when used on a feature dataset containing feature classes with different spatial reference identifiers (SRIDs).
The _Upgrade Spatial Reference_ tool is behaving as expected. The reason why it failed is because the wrong XY Resolution was chosen (0.0003125). This XY Resolution value caused the Low Precision Feature Classes to be upgraded to High Precision with an XYUNITS value of 3200, but this value did not match the XYUNITS of 1600 for the existing High Precision Feature Classes that reside in the ElectricDistribution Feature Dataset. To execute the tool successfully, restore the database back to before the tool was previously executed, then run the Upgrade Spatial Reference tool once again, but this time with an XY Resolution of 0.000625. This will upgrade the Low Precision data to High Precision with an XYUNITS value of 1600, which will match the XYUNITS value for the existing High Precision data.