Given that even the USG was normal, I don't think CKD is your problem. However, CKD is really common in senior cats and not usually detected in bloodwork until over 60%-75% of kidney function is gone, and in a USG until about 50% of function is gone, so starting a kidney friendly diet early helps slow the progression of the disease IF it's there, and if it's not you're still feeding a good, healthy diet so that's just fine. Given his age, I think starting a kidney friendly diet is a good idea. However, I completely disagree with your vet on what constitutes a kidney friendly diet!
There are several commercial foods that are good for both diabetes and CKD. To manage diabetes, you want to feed a low carb canned food, and to manage the kidney disease, you want to feed a high quality, low phosphorus canned food. Many vets simply recommend low protein prescription diets for cats with CKD, because they are by default low in phosphorus. However, it's the quality of protein and phosphorus levels that matter, not the protein values. The low-protein prescription kidney diets have only been shown to be beneficial in
end stage renal failure and should not be fed long term. In fact, they cause muscle wasting (the LAST thing you want to do to a senior kitty!) when fed in early stage CKD and are completely inappropriate for an early stage cat. I have no idea what your vet is thinking suggesting a low protein diet at this stage in the game, especially with the diabetes--that is actually going to cause more harm your cat more than the CKD would!
Here's an updated food list with the values for several premium foods:
https://docs.google.com/leaf?id=0B8...MzhkYTkxOGM4NThk&sort=name&layout=list&num=50. You're looking for something with less than 10% carbs (for the diabetes) and less than 250 mg/kcal of phosphorus (for the kidneys). The foods I would suggest are Merrick's Before Grain Beef, Merrick's Before Grain Turkey, Merricks' Cowboy Cookout, Merrick's Surf & Turf, Wellness Turkey, and EVO 95% Chicken & Turkey.
If those are out of your price range the next best thing to feed are the low carb Friskie's Special Diet Turkey & Giblets and Salmon flavors. However, I would
strongly urge a food without byproducts, and keep in mind that they're still cheaper than the prescription foods and usually about the same as many grocery store brands if bought in large cans or in cases. Studies have shown that the quality of the protein source does make a difference in controlling the disease, and that needs to be considered along side phosphorus content.
Here is a fantastic website with a lot of information about CKD:
http://www.felinecrf.org/