The electronic structure of magnesiowustite is investigated using self-consistent field Xα scattered wave (SCF-Xα-SW) molecular orbital calculations on (FeO₆)¹⁰⁻ and (FeMg₁₂O₁₄)²⁻ clusters. Calculated one-electron transition energies are used to interpret the optical spectrum of (Mg, Fe)O. The results are applied to the electrical and thermal conductivity of the lower mantle. The spin pairing of Fe²⁺ and the effect of pressure on bonding in magnesiowustite, with some inferences regarding the incorporation of oxygen in the outer core, is also addressed. The approach used here appears to give a reliable description of the energy and pressure dependence of the spin-allowed ⁵T_2g → ⁵E_g ligand field transition and the spin-pairing transition of Fe²⁺ in (Mg, Fe)O. However, the oxygen to metal charge transfer transitions in (Mg, Fe)O are not as reliably determined insofar as the p-d band gap varies with cluster size and the energies of the charge transfer states cannot be found without including configurational interaction. Nevertheless, it is argued that the charge transfer transitions that are intrinsic to (Fe, Mg)O are of a sufficiently high energy to be irrelevant to the electrical and thermal conductivity of the lower mantle. This is especially true if Fe²⁺ adopts the low-spin configuration. The geophysically significant properties of (Fe, Mg)O probably result from defect Fe³⁺.