THWN is suitable for wet locations, but that doesn't mean exposed stripped wires won't corrode. The terminations also have to be made up with a method suitible for wet environment, completely enclosed, and set up-right so any water will drip out instead of pooling up.
You are correct: Utility companies do not have to make their installations compliant with the NEC, nor do federal government facilities. In most cases, utility standards are much higher than those mandated by the NEC and government facilities are still NEC compliant even though they technically do not have to be.
Back in the day, the government had all their own codes, but there's been a push in recent decades to go with commercial standards. Several government agencies have adopted IBC and NEC as the official buildings codes; DoD and NASA I know of for sure, and a few others too. Of course, the facilitiy owners are their own AHJ, so...
