What is the encoding of the string get from StreamReader.ReadLine()

All .Net string variables are encoded with Encoding.Unicode (UTF-16, little endian). Even better, because you know your text file is utf-8 and told your streamreader the correct encoding in the constructor, any special characters will be handled correctly.

.NET strings are Unicode. Encoding doesn't play a part, then until you need to use it next. If you go to write it out to a file, for example, then you will specify the output encoding. But since .NET handles everything you do with the string via library calls, it doesn't matter how it's represented in memory.