According to ANSI C84.1 (which I believe is the relevant US specification), there is a tolerance of +/- 5%, which would put 127V just barely out of spec.
I could imagine that utilities calculate some average base load and adjust transformers accordingly to accommodate the expected voltage drop, given that 110/120V is relatively low and drops can be significant?
Obviously not an expert, but I wonder if they run a higher voltage in order to give them some margin from frequency dropping too far below 60 Hz (caused by generators slowing down) during high load periods?
I could imagine that utilities calculate some average base load and adjust transformers accordingly to accommodate the expected voltage drop, given that 110/120V is relatively low and drops can be significant?